Suppose When Disposable Personal Income Increases from $10,000 to $15,000

question 103

Multiple Choice

Suppose when disposable personal income increases from $10,000 to $15,000, consumption increases from $9,000 to $12,000. What is the marginal propensity to consume?

• A) 0.2
• B) 0.4
• C) 0.6
• D) 0.8

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Definitions:

P(A And B)

The probability that events A and B both occur, which can be calculated directly or via the multiplication rule for independent events.

P(B|A)

The likelihood of event B happening after event A has already taken place.

Complement

The set or amount that completes something to a whole, usually in the context of sets in mathematics or the complement rule in probability.

P(A)

The probability of event A occurring in a statistical context.