Answer to Question #136033 in Macroeconomics for cris

Question #136033

Which of the following statements is incorrect?
[1] Induced consumption does not require income.
[2] People always consume even if income is zero.
[3] Consumption increases by less than the increase in income.
[4] There is no relationship between consumption and interest rates

Expert's answer

[4] There is no relationship between consumption and interest rates. This statement is incorrect becase

consumption is dependent on interest rate.if interest rate increase then consumption will decrease.