The marginal propensity to consume (MPC) is defined as:
a. the additional consumption that results from one dollar increase in disposable income.
b. the fraction of total disposable income that households spend on consumption
c. the fraction of total disposable income that households save.
d. the additional disposable income households earn in a given period.
a
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GDP counts:
A. only final goods and services, because otherwise certain things would be double-counted and the GDP would be overestimated. B. only intermediate goods and services, because those are easier to track. C. both intermediate and final goods and services because it is important to capture all values, regardless of which market they take place in. D. all values that are reported to the government.
According to monetary neutrality and the Fisher effect, an increase in the money supply growth rate eventually increases
a. inflation and nominal interest rates, but does not change real interest rates. b. inflation, nominal interest rates, and real interest rates. c. inflation and real interest rates, but does not change nominal interest rates. d. nominal interest rates and real interest rates, but does not change inflation.
Investment in both physical and human capital tends to enhance economic growth because it generally
What will be an ideal response?
Investment in human capital
A. shifts the aggregate production function downward. B. shifts the LRAS to the left. C. shifts the aggregate production function upward. D. decreases the aggregate demand for labor.