Let "C = Ca + by" define the consumption function. The term "Ca" is known as
A) induced consumption. B) autonomous consumption.
C) the marginal propensity to save. D) the marginal propensity to consume.
B
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If a stock's dividend is expected to grow at a constant rate of 4 percent in the future
and it has just paid a dividend of $6.00 per share, and you have an alternative investment of equal risk that will earn a 7 percent rate of return, what would you be willing to pay per share for this stock? A) $6.66 B) $54.55 C) $200.00 D) $208.00
Based on our understanding of the determinants of the interest rate and bond prices, we know that a reduction in income will cause
A) an increase in bond prices and an increase in the interest rate (i). B) a reduction in bond prices and an increase in i. C) an increase in bond prices and a reduction in i. D) a reduction in bond prices and a reduction in i. E) none of the above