If disposable income increases by $100 and saving increased by $25, ceteris paribus, we may conclude that
A) the marginal propensity to consume is 0.25.
B) the marginal propensity to save is 0.25.
C) $15 is autonomous consumption.
D) a change in disposable income is induced by a change in consumption.
B
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Minimum wages:
A) benefit all workers. B) are usually set below equilibrium wages. C) can reduce wage rigidity. D) can increase unemployment.
As the price of video games is raised from $40 to $45, their quantity demanded fell from 1.5 million copies to 1.2 million copies. The elasticity of demand of video games is:
a. 0.25 b. 1.89 c. 1.66 d. 2.08
If policy makers think the natural rate of unemployment is lower than it really is, then their policies designed to move the economy to the estimated natural rate, if continued over the long run, will: a. cause continuing inflation
b. shift the long-run aggregate supply curve to the right. c. shift the supply curve of labor to the right. d. lead to a lower price level. e. keep the economy below its potential GDP level.