Which of the following accurately contrasts consumption and investment?
a. Investment is a much larger component of aggregate demand than consumption.
b. Consumption involves government purchases, whereas investment involves household purchases.
c. Consumption includes purchases by households, whereas investment includes purchases by firms.
d. Investment is more influenced by disposable income than is consumption.
c. Consumption includes purchases by households, whereas investment includes purchases by firms.
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An increase in the interest rates in a country:
A) reduces net exports. B) does not affect net exports. C) increases net exports. D) results in a an outflow of capital from the country.
Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price? If a firm set its price below the current market price, what effect would this have on the market?