The average propensity to consume (APC) equals
A) the change in consumption expenditures divided by the change in real disposable income.
B) real disposable income divided by consumption expenditures.
C) the change in real disposable income divided by the change in consumption expenditures.
D) consumption expenditures divided by real disposable income.
D
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As the economy contracts, tax revenues
A. rise and transfer payments rise, causing the economy to contract by more than it would in the absence of automatic stabilizers. B. rise and transfer payments fall, causing the economy to contract by less than it would in the absence of automatic stabilizers. C. fall and transfer payments fall, causing the economy to contract by more than it would in the absence of automatic stabilizers. D. fall and transfer payments rise, causing the economy to contract by less than it would in the absence of automatic stabilizers.
Forward contracts are of limited usefulness to financial institutions because
A) of default risk. B) it is impossible to hedge risk. C) they are relatively inflexible. D) of interest-rate risk.
If you lend money at a nominal interest rate of 9 percent and the inflation rate is 1 percent, what real interest rate will you earn?
a. 3 percent b. 4 percent c. 8 percent d. 12 percent e. 15 percent
Suppose the Clean Air Act calls for a rise in NO2 abatement (A) from 50 to 60 percent and that the MSC (in millions) is MSC = 12 + 0.8A, where A is measured in percent. Then, the incremental cost of this policy change is
a. $8 million c. $560 million b. $40 million d. $500 million