In General, the Marginal Propensity to Spend Is the Change

question 6

Multiple Choice

In general, the marginal propensity to spend is the change in total desired expenditure induced by a change in whereas the marginal propensity to consume is the change in desired consumption expenditure induced by a change in . In the case of the simplest macro model with no government and no international trade, however, the marginal propensity to spend is the marginal propensity to consume.

• A)national income ; disposable income ; equal to
• B)national income ; disposable income ; greater than
• C)national income ; disposable income ; smaller than
• D)disposable income ; national income ; equal to
• E)disposable income ; national income ; greater than

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Definitions:

Inferior Good

An economic term for a good whose demand decreases as the consumer's income increases, contrasting with normal goods.

Equilibrium Quantity

The quantity of goods or services supplied that is equal to the quantity demanded at the market price.

Normal Good

A normal good is a type of good for which demand increases as the income of individuals increases.

Equilibrium Price

The rate at which the product's supply equals its demand in the market.