Question

Total consumption expenditure by households under Keynesian Economics is a combination of ----- and ----.

• A. Autonomous Consumption, Autonomous Investments
• B. Autonomous Investments, Induced Consumption
• C. Induced Investments, Autonomous Investments
• D. Autonomous Consumption, Induced Consumption

Hint:

In Keynesian Economics, distinguish between autonomous (independent) and induced (dependent) components to better understand expenditure models.

Answer 1

The Correct Option is D

Step 1: Understanding the components.
In Keynesian Economics, total consumption expenditure by households comprises:
1. Autonomous Consumption: Basic consumption irrespective of income levels.
2. Induced Consumption: Consumption dependent on disposable income.
Step 2: Evaluating the options.
- Option (A) combines two unrelated concepts.
- Option (B) is incorrect as Autonomous Investments are not a part of consumption expenditure.
- Option (C) mixes investment terms that are unrelated to consumption.
- Option (D) accurately represents the two components of household consumption.
Step 3: Conclusion.
The correct combination is \( \mathbf{Autonomous Consumption} \) and \( \mathbf{Induced Consumption} \), so the answer is \( \mathbf{(D)} \).