The consumption function shows the relationship
A) between households' disposable income and their consumption spending.
B) between the relative prices of goods and the total amount of household consumption spending.
C) between consumption spending and capital gains.
D) between government spending and tax collection.

Question

Quizplus · Accepted Answer

The consumption function is a mathematical formula that expresses the relationship between households' disposable income and their consumption spending. It is used to understand how changes in income affect consumption.

The Consumption Function Shows the Relationship