Which of the following graphs shows the correct effect on the consumption function when there is a decrease in real interest rates and the substitution effect is dominant? Figure A Figure B Total consumption Consumption O a. Figure B O b. Figure A O c. Figure C O d. Figure D Consumption function Figure C Income Income (GDP) Consumption Total consumption Income (GDP) Figure D Consumption function Income
Which of the following graphs shows the correct effect on the consumption function when there is a decrease in real interest rates and the substitution effect is dominant? Figure A Figure B Total consumption Consumption O a. Figure B O b. Figure A O c. Figure C O d. Figure D Consumption function Figure C Income Income (GDP) Consumption Total consumption Income (GDP) Figure D Consumption function Income
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 1.1P
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