Question

Which of the following will determine the level of autonomous consumption?

The level of economic growth

The level of risk and or uncertainty

The level of the interest rate

Savings and or credit

Answer 1

Solution:

The correct answer is d.). Savings and credit.

 

The level of savings tends to affect autonomous consumption since the more you save, the more you can spend on autonomous consumption and vice versa.

Similarly, the level of credit you can borrow or the ability to borrow affects your autonomous consumption. The level of credit is borrowed for autonomous spending, and the higher the borrowing, the bigger it gets.