Question

The consumption function shows how an increase in ______ influences ______. a. income; households' aggregate planned expenditure

Answer 1

The consumption function shows how an increase in Disposable income influences consumption expenditure.

Consumption expenditure:

• Consumer spending, often known as personal consumption expenditures (PCE), is the amount spent by or on behalf of US citizens on products and services. BEA releases annual, quarterly, and monthly estimates of consumer expenditure on a nationwide scale. recently released.
• C = c+bY is described by the consumption function equation. The value of total consumption will rise if the value of (By) is higher. It clearly states that if income rises, expenses must follow like. We must take into account the fact that the pace of income growth exceeds the rate of expenditure growth.
• Consumption examples include getting a new pair of shoes, a hamburger at a fast food joint, or services like having your house cleaned. Additionally, the term "consumer spending" is frequently used.

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