Question 18
MediumOriginal questionRead the two statements and choose the correct option.
I. Autonomous consumption rises with income.
II. Induced consumption, bY, rises with income.
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
Autonomous consumption, c̄, is the part that does not depend on income. I is false.
Induced consumption is MPC × income. II is true.
- Concept
- Autonomous and induced consumption
- Typical timeTypical
- 70 s
- Your timeYours
- —
Practise this chapter →
Ten questions from Aggregate Demand, Consumption & Saving, at your own pace.