The marginal propensity to consume (MPC)
A) shows the percentage of real disposable income consumed at each level of income.
B) shows how much of an extra dollar of real disposable income is spent.
C) shows how much real disposable income changes when consumption falls.
D) is greater than 1 only if the marginal propensity to save is greater than 1.
B
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When the Fed engages in open market operations, it is buying or selling
A) loans made to banks to meet the legal reserve requirement ratio. B) gold. C) U.S. government securities newly issued by the U.S. Treasury. D) capital equipment. E) U.S. government securities.
In the presence of asymmetric information, a fixed-fee contract
A) achieves production efficiency. B) can lead to opportunistic behavior on the part of the agent. C) is impossible to write. D) will result in the principal earning all of the profit.
Which statement is false?
A. The federal government collects more in Social Security taxes than in personal income tax. B. The federal government collects more in Social Security taxes than in corporate income tax. C. The federal government collects more in personal income tax than in corporate income tax. D. None of these statements are false.
Refer to the above figure. When the price in the market is $4, economic profits will equal
A. $200. B. $400. C. $300. D. $100.