Exhibit 10-7 -Here Is a Consumption Function: C = C₀ + MPC(Y_d).If

question 91

Multiple Choice

Exhibit 10-7

-Here is a consumption function: C = C₀ + MPC(Y_d) .If consumption is $2,000,MPC =0.75,and disposable income is $2,000,what does autonomous consumption equal?

• A) $950
• B) $3,500
• C) $500
• D) $4,500
• E) none of the above

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Definitions:

Allocate

To allocate means to distribute resources or duties for a specific purpose or to particular entities.

Distribute

To share or spread something, especially resources or goods, among a group of people or over an area.

Apply

To make use of or put into effect; in accounting, it may refer to applying principles or policies.

Market Value

The current price at which an asset or service can be bought or sold in an open market.