The Marginal Propensity to Consume Refers to

question 365

Multiple Choice

The marginal propensity to consume refers to

• A) the additional consumption expenditure that occurs out of an additional dollar of disposable income.
• B) total consumption expenditure divided by total disposable income.
• C) the additional consumption expenditure that occurs out of an additional dollar of investment.
• D) the additional saving that occurs out of an additional dollar of disposable income.

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Definitions:

Import Quota

A government-imposed limit on the quantity or value of a particular product that can be imported into a country over a specified time period.

Foreign Firms

Businesses that operate in a country other than where their original headquarters are located.

Revenue Decrease

A decline in the amount of money received from sales or services over a certain period.

Ethanol Imported

Refers to ethanol (a biofuel) that is bought from foreign producers and brought into a country’s borders, often used as an additive in gasoline.