Robert Tetley's Disposable Income Rose from $40 000 Per Year

question 66

Multiple Choice

Robert Tetley's disposable income rose from $40 000 per year to $42 000 and his desired consumption expenditure rose from $38 000 to $39 600. It can be concluded that his

• A)marginal propensity to consume decreased.
• B)marginal propensity to consume is 0.05.
• C)marginal propensity to save is 0.20.
• D)average propensity to consume is constant.
• E)average propensity to save is always 0.05.

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Definitions:

Stockholders' Equity

The residual interest in the assets of an entity after deducting its liabilities, representing the ownership interest of the shareholders.

Fees Earned

Income earned through the delivery of services.

Wages Expense

An account representing the total cost of labor paid to employees, typically recorded over a specific accounting period.

Dividends

Payments made by a corporation to its shareholder members from the company's earnings.