If you know that an increase in a household's disposable income from $35,000 to $45,000 leads to an increase in consumption from $30,000 to $38,000, then you can conclude that the:
a. Marginal propensity to save is .25
b. Marginal propensity to consume is .8
c. Slope of the consumption schedule is .75
d. Average propensity to consume is .8
Answer: b. Marginal propensity to consume is .8
You might also like to view...
When drawn correctly and preferences are consistent, indifference curves do not intersect.
Answer the following statement true (T) or false (F)
In monopolistic competition, in the long run firms have
A) a capacity shortage. B) excess capacity. C) an economic profit. D) an economic loss.
According to the law of demand, other things being equal
A) when the price a good goes up, then people buy more of that good. B) when the price a good goes up, then people buy less of that good. C) when people's income goes up, then they buy more of a good. D) when people's income goes up, then they buy less of a good.
A shortage results when a
A. nonbinding price ceiling is removed from a market. B. binding price ceiling is imposed on a market. C. nonbinding price ceiling is imposed on a market. D. binding price ceiling is removed from a market.