Assume that an increase in a household's disposable income from $40,000 to $48,000 leads to an increase in consumption from $35,000 to $41,000. This means that the household's
A. marginal propensity to save is 0.20.
B. marginal propensity to consume is 0.6.
C. average propensity to consume is 0.75.
D. marginal propensity to consume is 0.75.
Answer: D
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Which of the following events will increase the domestic real interest rate in an open economy?
A. A decrease in the domestic saving B. An increase in net capital inflow C. An increase in domestic saving D. A decrease in the perceived riskiness of investing in the domestic economy
Which statement best describes the relationship between scarcity and shortage?
A) Neither scarcity nor shortages will exist if money prices are allowed to determine who gets what. B) Scarcity and shortages are unavoidable as long as money prices are allowed to determine who gets what. C) Scarcity is an inescapable fact of life but shortages are avoidable. D) Shortages are an inescapable fact of life but scarcity can be eliminated.
The timeshare condominium in Florida you bought last year turned out to involve many extra costs and restrictions that were not apparent when you bought it. This is an example of
a. natural selection b. moral hazard c. hidden actions d. open-access resources e. hidden characteristics
One reason for the short-run aggregate supply curve (SRAS) is: a. a fixed CPI market basket
b. perfect knowledge of workers. c. fixed-wage contracts. d. the upward-sloping production function.