If the Marginal Propensity to Consume Is 0

question 25

Multiple Choice

If the marginal propensity to consume is 0.8, every $10 increase in disposable income increases

• A) consumption expenditure by $8.00.
• B) saving by $0.20.
• C) consumption expenditure by $0.80.
• D) consumption expenditure by $18.00.

---

Definitions:

Capital Expenditure

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Cash Inflows

The total amount of money being transferred into a business, typically measured within a specific time period.

Cash Outflows

Money that is spent or transferred out of a business, usually as a result of operational expenses, investments, or financing activities.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.