In the consumption function C = a + c(Y -T), "autonomous consumption" appears as
A)a
B)c
C)cY.
D)-cT.
E)c(Y - T).

Question

Quizplus · Accepted Answer

Autonomous consumption refers to the constant term 'a' in the consumption function, which represents the level of consumption that would exist even if income and taxes were both zero. Therefore, option A is the correct answer as it corresponds to the autonomous consumption term.

In the Consumption Function C = a + C(Y -T)