Asked by Abigail Zurita on May 09, 2024
Verified
As disposable income grows,
A) both autonomous C and induced C rise.
B) both autonomous C and induced C fall.
C) autonomous C rises and induced C falls.
D) autonomous C falls and induced C rises.
E) autonomous C stays the same and induced C rises.
Disposable Income
Households' spendable and savable funds following income tax deductions.
Autonomous C
Spending by consumers that does not depend on current income levels, such as basic needs or contractual obligations.
- Understanding the principle of autonomous consumption and its importance in economic investigations.
Verified Answer
LA
Lizzy AlvarezMay 13, 2024
Final Answer :
E
Explanation :
Autonomous consumption (autonomous C) is the level of consumption that occurs when income is zero; it does not change with income. Induced consumption (induced C) increases as disposable income grows because it is directly related to the level of income.
Learning Objectives
- Understanding the principle of autonomous consumption and its importance in economic investigations.