What Is the Marginal Propensity to Consume? Explain Why the Sum

question 173

Short Answer

What is the marginal propensity to consume? Explain why the sum of marginal propensity to consume and marginal propensity to save must equal 1.

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Definitions:

Capital Surplus

Excess amount received by a company over the par value of its stock, representing additional paid-in capital.

Earned Surplus

The portion of a company's net income that is retained for reinvestment, rather than being distributed as dividends to shareholders.

MBCA

Model Business Corporation Act, a recommendation for state law on corporations, providing a template for corporate governance and operations.

Net Asset Test

A financial assessment to determine a company's or individual's net worth by subtracting total liabilities from total assets.