The aggregate consumption function
A)refers to the relationship between consumption expenditure and relative prices.
B)describes the relationship between desired consumption expenditure and the factors that determine it, like national income.
C)is relatively unimportant in macroeconomics, because consumption is such a small component of aggregate expenditure.
D)and aggregate expenditure are the same.
E)refers to the relationship between an individual's consumption and his/her wealth.

Question

Quizplus · Accepted Answer

The aggregate consumption function describes the relationship between desired consumption expenditure and the factors that determine it, like national income. It is a key component in macroeconomics, as consumption is a significant part of aggregate expenditure. Options A, C, D, and E are incorrect because they do not accurately describe the aggregate consumption function.

The Aggregate Consumption Function