The Change in Consumption Expenditure Divided by the Change in Disposable

question 203

Multiple Choice

The change in consumption expenditure divided by the change in disposable income that caused the consumption change is called

• A) the marginal propensity to consume.
• B) autonomous consumption.
• C) the average propensity to consume.
• D) the consumption factor.

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Definitions:

Effective Annual Rate

The effective annual rate is the interest rate on a financial product restated from the nominal rate as an annual rate that takes into account compounding over a given period.

Nominal Annual Rate

The interest rate stated on a loan or financial product, not accounting for compounding or inflation over time.

Interest Payments

Periodic payments made to lenders or bondholders as compensation for lending their money.

Nominal Interest Rate

The stated interest rate of a bond or loan, not adjusted for inflation, representing the actual annual cost of borrowing.