Answer to Question #123964 in Macroeconomics for Dennis van der Merwe

Question

Which one of the following statements is correct?
A. As wealth increases, spending decreases.
B. Consumption spending is a volatile component of total spending.
C. The link between real consumption and real income is determined by the marginal propensity to consume.
D. In South Africa, government spending is the biggest component of aggregate spending C+I+G+X-M.

Answer 1

C) The link between real consumption and real income is determined by the marginal propensity to consume