What Is the Term for the Fraction of Extra Income

question 54

Multiple Choice

What is the term for the fraction of extra income that a household consumes rather than saves?

• A) the marginal propensity to consume
• B) the total propensity to consume
• C) the average consumption
• D) the marginal tax rate

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Definitions:

Capital Stock

The total amount of common and preferred shares that a company is authorized to issue, representing the equity ownership of the company.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits, and distributed proportionally to the amount of shares owned.

Financing Activity

Transactions with lenders or investors that involve borrowing funds, repaying loans, obtaining equity capital, and paying dividends.

Subsequent Events

Events that occur after the balance sheet date but before financial statements are issued or available to be issued.