Question 11
An increase in consumption might be caused by a(n):
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Question 12
A decrease in consumption is caused by a(n):
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Question 13
Demand-pull inflation:
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Question 14
If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inflation in that year is:
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Question 15
Suppose a family's consumption exceeds its disposable income. This means that its:
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11) Option C. Higher wealth accumulated will create a wealth effect and consumer will feel rich even when income is unchanged
12) Option D. When borrowing is reduced, it is natural that the consumption falls
13) Option C. This is basically the result of a tendency to buy more goods and services than what is available in the economy or what it is capable of producing.
14) Option .B Inflation rate is (333 - 300)*100/300 = 11%.
15) Option B. APC measures consumption income ratio so when consumption > income, APC is > 1.
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