Suppose the Consumption Schedule Is: C = 20

question 43

Multiple Choice

Suppose the consumption schedule is: C = 20 + .9Y, where C is consumption and Y is disposable income.Refer to the above data.The MPC is:

• A).45.
• B).20.
• C).50.
• D).90.

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Definitions:

Discounted Payback Period

The time required to recoup the cost of an investment while considering the time value of money, typically shorter than simple payback period.

Required Return

The least profit anticipated by an investor from an investment in a certain asset, given its risk profile.

Cash Flows

The net amount of cash being transferred into and out of a business, especially as affecting liquidity.

Average Accounting Return

A measure of profitability calculated as the average net income divided by the average book value of investment over a period.