The Marginal Propensity to Consume

question 65

Multiple Choice

The marginal propensity to consume

• A)increases as the economy moves upward along the consumption function.
• B)is negative when saving is positive.
• C)is greater than the slope of the 45- degree line.
• D)is equal to zero when disposable income equals consumption expenditure.
• E)is equal to 1 minus the slope of the saving function.

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Definitions:

Transferable Permits

Transferable permits are regulatory instruments that allow the holder to emit a certain amount of pollution or use a certain amount of a resource; they can be bought and sold, creating a market for these permits.

Transferable Emissions Permit

A market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants, allowing entities to buy, sell, or trade permits.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a good or service.

Abatement

The reduction in the degree or intensity of pollution.