Which of the Following Statements Must Be True in the Simple

question 98

Multiple Choice

Which of the following statements must be true in the simple macro model (with a closed economy and no government) ?

• A)APC increases as income rises.
• B)APS decreases as income rises.
• C)MPS and MPC are both negative.
• D)MPC is negative below a certain level of income.
• E)The sum of MPC and MPS is one.

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Definitions:

Fair Value Enterprise Method

is a valuation approach used to measure the value of a business by assessing the present value of its expected future earnings.

Non-Controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company, reflecting the minority shareholders' ownership.

Shareholders' Equity

The amount that would be returned to shareholders if all the company's assets were liquidated and all its debts repaid.

Identifiable Net Assets

The assets of a company that can be clearly identified and quantified on the balance sheet, excluding goodwill.