The Table Below Shows Disposable Income and Desired Consumption for a Closed

question 105

Multiple Choice

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-2 Refer to Table 21-2.The marginal propensity to consume is equal to

• A)0.2.
• B)0.4.
• C)0.6.
• D)0.67.
• E)0.8.

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Definitions:

Inventories

Raw materials, work-in-process products, and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Operating Costs

Expenses associated with the day-to-day functions of running a business, excluding capital expenditures.

Net Sales

Revenue from sales transactions after deducting returns, allowances for damaged goods, and discounts.

Assets

Resources owned or controlled by a business, expected to produce future economic benefits.