The consumption function shows how ________
A) the marginal propensity to consume varies with disposable income
B) income varies as a result of changes in consumption
C) consumption depends on the decision to save
D) all of the above
E) none of the above
E
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Refer to Figure 15-1. In the figure, the money demand curve would move from Money demand1 to Money demand2 if
A) the price level decreased. B) the interest rate increased. C) the Federal Reserve sold Treasury securities. D) real GDP increased.
If the Fed lowers the reserve requirement, then this
A) increases excess reserves, encourages banks to make more loans, and increases the money supply. B) decreases excess reserves, causes banks to reduce their loans, and decreases the money supply. C) decreases excess reserves, causes banks to reduce their loans, and increases the money supply. D) increases excess reserves, causes banks to reduce their loans, and increases the money supply.