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 = .
Holding many risky assets and thus reducing the overall risk an investor faces is called
A) diversification. B) foolishness. C) risk acceptance. D) capitalization.
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