What is the primary idea behind a consumption function?

Understanding the Consumption Function

Interactive Video
•
Mathematics, Business, Social Studies
•
10th - 12th Grade
•
Hard

Emma Peterson
FREE Resource
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10 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
It describes how investments affect economic growth.
It explains the relationship between taxes and government spending.
It illustrates how aggregate income influences aggregate consumption.
It shows how savings drive consumption.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the hypothetical consumption function, what is the base level of consumption?
100
500
1500
1000
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What percentage of disposable income is spent in the hypothetical model?
70%
40%
60%
50%
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the difference between income and disposable income?
Disposable income is income before taxes.
Disposable income is income after taxes.
Disposable income is income after investments.
Disposable income is income after savings.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is disposable income used in the consumption function instead of total income?
Because it includes savings.
Because it excludes government spending.
Because it excludes taxes.
Because it includes investments.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What does the slope of the consumption function represent?
The marginal propensity to save.
The total income of the economy.
The base level of consumption.
The marginal propensity to consume.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the graph of the consumption function, what does the y-intercept represent?
The marginal propensity to consume.
The disposable income.
The base level of consumption.
The total income.
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