Refer to the Above Diagram

question 1

Multiple Choice

Refer to the above diagram.The average propensity to consume:

• A)is greater than 1 at all levels of disposable income above $100.
• B)is greater than 1 at all levels of disposable income below $100.
• C)is equal to the average propensity to save.
• D)cannot be determined from the information given.

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Definitions:

Happiness

Happiness is a state of well-being and contentment characterized by positive emotions ranging from contentment to intense joy.

Optimum Arousal Theory

A psychological concept suggesting that individuals perform best with a certain level of arousal, which varies from one person to another.

James-Lange Theory

A theory of emotion suggesting that physiological arousal precedes and causes the subjective experience of emotion.

Emotion

A complex psychological state involving an individual's subjective experience, physiological response, and behavioral or expressive response.