An increase in autonomous consumption means that
A) the consumption function shifts down.
B) the consumption function shifts up.
C) the consumption function becomes steeper.
D) the consumption function becomes less steep.
Answer: B) the consumption function shifts up.
You might also like to view...
According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply generates
A) increased spending on consumer goods and services directly, which causes an increase in aggregate demand. B) an increase in aggregate supply since the supply of money is part of aggregate supply. C) lower interest rates, which causes an increase in planned real investment spending and an increase in aggregate demand. D) an increase in nominal GDP and a change in the price level, but no change in real GDP.
Suppose California and Wisconsin produce wine and cheese. Making a bottle of wine costs $3 in California, but $12 in Wisconsin. On the other hand, making a pound of cheese costs $4 in California, and $8 in Wisconsin. Under these conditions,
A. California should export wine and Wisconsin should export cheese. B. California should export cheese and Wisconsin should export wine. C. California should export both wine and cheese. D. the two states cannot gain from trade with each other until a third state starts to export bottle openers.