If You Save $80 When You Experience a $400 Rise

question 6

Multiple Choice

If you save $80 when you experience a $400 rise in your income,

• A) your MPS is 0.25.
• B) your MPC is 0.80.
• C) your MPC is 0.85.
• D) your MPS is 0.40.

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Definitions:

Surplus

A situation where the quantity of a product or service supplied exceeds the quantity demanded at the current price.

Binding Price Floor

An enforced price limit by authorities that prevents prices from falling below a certain level, causing excess supply.

Surplus

A situation where the quantity supplied of a good exceeds the quantity demanded, often leading to a decrease in prices.

Market

A market is a venue where buyers and sellers meet to exchange goods, services, or financial instruments. It can be physical or virtual.