The Consumption Function Used in the Textbook Is Based on a Number

question 95

Multiple Choice

The consumption function used in the textbook is based on a number of assumptions.Given these assumptions,which of the following statements is true?

• A)Below a certain level of income,APC > 1 and MPC < 0.
• B)The MPC and APC are always less than unity.
• C)As income rises,the MPC falls and the APC rises.
• D)The MPC is greater than zero and less than one,and the APC falls as income rises.
• E)The APC is greater than zero and less than one,and the MPC falls as income rises.

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Definitions:

Interest-Rate Cost

The expense incurred from borrowing money, essentially the price paid for the use of borrowed funds, or, for investors, the returns from lending.

R&D Expenditure

R&D Expenditure refers to the funds allocated by firms or governments towards research and development to foster innovation and growth.

Scientific Characteristics

The inherent or distinctive attributes and features of scientific inquiry and methodology, such as objectivity, empirical evidence, and systematic experimentation.

Industry Structure

The composition and characteristics of firms in a particular market, determining the nature of competition and pricing strategies.