The fraction of a change in income that is consumed or spent is called
A. the marginal propensity to save.
B. average consumption.
C. the marginal propensity to consume.
D. the marginal propensity of income.
Answer: C
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If net capital flow were zero for a country, then exports would not equal imports
Indicate whether the statement is true or false
The gold standard probably made the Great Depression more severe in the United States because
A) the value of gold declined sharply during those years. B) the existence of the gold standard kept prices from falling. C) the money supply in the United States increased rapidly as gold flowed into the country. D) the Fed attempted to reduce gold outflows by raising the discount rate.
Firms might vertically disintegrate when
A) it becomes more profitable for a firm to specialize. B) the IRS cracks down on transfer pricing. C) the industry becomes too large to support itself. D) the industry shrinks in size.
Unlimited liability explains why
a. bondholders don't buy stock b. many proprietors are reluctant to expand their businesses c. banks are reluctant to lend money to corporations d. sole proprietors prefer not to incorporate e. many businesses go bankrupt