Last year, Linus earned a salary of $25,000 and he spent $24,000, thus saving $1000. At the end of the year, he received a bonus of $1000 and he spent $500 of it, saving the other $500. What was his marginal propensity to consume?
A. .96
B. .04
C. .50
D. .02
Answer: C
You might also like to view...
An automobile manufacturer decides to increase its retained earnings. Assuming all else equal, this will cause:
A) a downward movement along the current credit supply curve of the firm. B) the current credit supply curve of the firm to shift to the left. C) the current credit supply curve of the firm to shift to the right. D) an upward movement along the current credit supply curve of the firm.
Refer to Figure 9-2. The loss in domestic consumer surplus as a result of the tariff is equal to the area
A) C + D + E + F. B) B + D + E + F. C) D + E + F. D) B.
Asymmetric information is a form of
A) market imperfection. B) regulatory arbitrage. C) capital market liberalization. D) financial sector deregulation.
When the U.S. price level falls, the open economy effect indicates that
A) U.S. imports will rise. B) U.S. residents will move away from domestic goods and buy more foreign goods. C) U.S. exports will increase. D) foreigners will buy fewer U.S. goods.