When Disposable Income Increases from $7 Trillion to $7

question 176

Multiple Choice

When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increase from $6.5 trillion to $6.9 trillion. The MPS is equal to

• A) 0.8.
• B) 0.75.
• C) 0.76.
• D) 0.2.

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Definitions:

Overconfidence

A cognitive bias where someone's subjective confidence in their judgments is greater than their objective accuracy.

Short-Term Thinking

A focus on immediate results or benefits at the expense of longer-term goals or implications.

Satisficing

A decision-making strategy that seeks an adequate solution rather than the optimal one, based on the practicality of attaining satisfactory results within limitations.

Ambiguity

Ambiguity involves situations or information that are unclear, uncertain, or open to more than one interpretation, often leading to confusion or misunderstanding.