The marginal propensity to consume can be found by dividing
A. Disposable income by total consumption.
B. The change in total consumption by the change in disposable income.
C. Total consumption by total saving.
D. Total consumption by the number of people consuming.
Answer: B
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A new tax introduced by the government will: a. decrease disposable income
b. increase disposable income. c. lead to a reduction in government spending. d. lead to an increase in government spending. e. have no effect on disposable income.
If a U.S. shirt maker purchases cotton from Egypt, U.S. net exports
a. increase, and U.S. net capital outflow increases. b. increase, and U.S. net capital outflow decreases. c. decrease, and U.S. net capital outflow increases. d. decrease, and U.S. net capital outflow decreases.
The basic difference between macroeconomics and microeconomics is:
A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. B. microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms. C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.
Investment decisions are based on the trade-off between the:
A. potential profit that could be generated and the willingness of a lender to make the loan. B. future value of the loan and the present value of the loan. C. interest rate that savers will earn and the interest rate that the borrowers will have to pay. D. potential profit that could be generated by investment and the cost of borrowing money to finance the investment.