The marginal propensity to save is
a. the change in saving induced by a change in consumption
b. (change in S) × (change in Y)
c. 1 – MPC/MPC
d. (change in Y – bY)/(change in Y) where b is the MPC
e. 1 – MPC
E
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If you have a bond that pays a lump sum at the time of maturity, it is
A) called a zero-coupon bond. B) worth more than a bond with coupon payments. C) riskier than a bond with coupon payments. D) a safer investment than a perpetuity.
In the model of the money supply process for M2, the relationship between checkable deposits and the M2 money supply is represented by
A) D = × M2. B) D = (1 + c + t + mm) × M2. C) M2 = × D. D) M2 = .
The total value added of the economy equals:
(a) Total profits; (b) Total wages; (c) Total value of all final transactions in the economy; (d) None of the above
Holding many risky assets and thus reducing the overall risk an investor faces is called
A) diversification. B) foolishness. C) risk acceptance. D) capitalization.