If an Individual's Income Increases from $500 to $700 and Their

question 34

Multiple Choice

If an individual's income increases from $500 to $700 and their spending increases by $150, what is the marginal propensity to consume?

• A) 0.75
• B) 1.25
• C) 4
• D) 50

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Definitions:

Supplies Expense

The cost of supplies used during an accounting period, typically classified as an operating expense.

Accrued Salaries

Salaries that have been earned by employees but have not yet been paid by the company.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operational costs, from its total revenue.

Fixed Asset Account

An account on a company’s balance sheet that reports the cost and accumulated depreciation of assets with a useful life of more than one year.