When the average propensity to save (APS) is 0.20, then this means
A) people are spending 60 percent of their disposable income and investing the remaining 20 percent.
B) people are spending 20 percent of their disposable income.
C) people are spending 80 percent of their disposable income.
D) people are saving $0.20 of the last dollar earned.
C
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If the present value of all future revenue is positive, then
A) the firm should remain operating, even if it earns negative profit in the short run. B) the firm should shut down if it is earning a negative profit in the short run. C) the firm should shut down if it cannot cover its fixed costs in the short run. D) Unable to determine with the information given.
An improvement in technology would result in
A) upward shifts of MC and reductions in output. B) upward shifts of MC and increases in output. C) downward shifts of MC and reductions in output. D) downward shifts of MC and increases in output. E) increased quality of the good, but little change in MC.
In the above figure, assume the aggregate demand of the economy is AD2 and the Fed actions move aggregate demand to AD1. In this situation, the Fed has practiced
A) contractionary monetary policy. B) expansionary monetary policy. C) irresponsible fiscal policy. D) Keynesian fiscal policy.
Which of the following is likely to have the most price elastic demand?
a. dental floss b. milk c. salt d. diamond earrings