If Ben's MPC Is

question 102

Multiple Choice

If Ben's MPC is .80, this means that he will:

• A)spend eight-tenths of any increase in his disposable income.
• B)spend eight-tenths of any level of disposable income.
• C)break even when his disposable income is $8,000.
• D)save eight-tenths of any level of disposable income.

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Definitions:

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using a company’s assets to create profits.

Net Income

The final income of a business once expenses and taxes are removed from the total revenue.

Invested Capital

Total capital invested in a company by its shareholders and debt holders, used for calculating returns generated by a company.

Assets

Assets represent resources owned or controlled by a business or individual that are expected to produce economic value or benefit in the future.