Refer to the given data. The marginal propensity to save:
Answer the question on the basis of the following consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars.
A. is highest in economy (1).
B. is highest in economy (2).
C. is highest in economy (3).
D. cannot be determined from the data given.
A. is highest in economy (1).
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Which of the following is true about an individual's choice of insurance assuming state-independent tastes?
A. Full insurance will be chosen from a full menu of actuarily fair insurance if tastes are risk averse. B. No insurance will be chosen if the menu of insurance contracts is actuarily unfair and tastes are risk averse. C. No insurance will be chosen if the menu of insurance contracts is actuarily unfair and tastes are risk-neutral. D. (a) and (b) are true. E. (a) and (c) are true. F. (b) and (c) are true. G. All of the above. H. None of the above
Which of the following makes demand less elastic?
A) the existence of many close substitutes for the good B) spending a large proportion of income on the good C) a short time elapsing since the product's price changed D) All of the above answers are correct.
Bruce the Bank Manager can reduce interest rate risk by ________ the duration of the bank's assets to increase their rate sensitivity or, alternatively, ________ the duration of the bank's liabilities
A) shortening; lengthening B) shortening; shortening C) lengthening; lengthening D) lengthening; shortening
If regulators were to ensure that monopolistically competitive firms follow a marginal cost-pricing rule: a. new firms would be likely to enter the market
b. the most efficient firms would not likely be affected. c. all firms would experience losses. d. firms would operate at the most efficient scale.