Define autonomous consumption and explain how it is represented ...

[deesands]

Define autonomous consumption and explain how it is represented on a consumption function graph.
 
  What will be an ideal response?

Question 2

An increase in the expected profit from new capital brings about a
 
  A) movement down along the demand for loanable funds curve.
  B) movement up along the demand for loanable funds curve.
  C) rightward shift of the demand for loanable funds curve.
  D) leftward shift of the demand for loanable funds curve.
  E) rightward shift of the supply of loanable funds curve.

[GCabra]

Answer to Question 1

Autonomous consumption is the consumption expenditure that occurs when disposable income is zero. This situation is possible only in the short run because people can either spend past savings or borrow. The amount of autonomous consumption is shown by the vertical intercept of the consumption function.

Answer to Question 2

C

[deesands]

Gracias!

[xiaomengxian]

Excellent