-Based Upon the Above Table, the MPC for the Consumption

question 118

Multiple Choice

$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Disposable income } \\\text { (billions of dollars) }\end{array} & \begin{array} { l } \text { Consumption } \\\text { exp enditure } \\\text { (billions of dollars) }\end{array} \\\hline 400 & 450 \\\hline 600 & 600 \\\hline 800 & 750 \\\hline 1000 & 900 \\\hline 1200 & 1050 \\\hline\end{array}$$
-Based upon the above table, the MPC for the consumption function is

• A) constant at 0.75.
• B) increasing as income rises.
• C) constant at 0.25.
• D) equal to 1.0 at $600 billion.

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Definitions:

Investing Activities

Investing activities are financial transactions related to the acquisition or sale of long-term assets or investments not related to the core business operations.

Financing Activities

Transactions and events affecting the equity and debt of the company, usually related to borrowing, repaying, and issuing equity.

Noncash Investing

Investment activities that do not involve the immediate outlay of cash, such as the exchange of one asset for another.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing shares, borrowing money, and repaying debt.