Which of the Following Is True About the Marginal Propensity

question 148

Multiple Choice

Which of the following is true about the marginal propensity to consume and the marginal propensity to import?

• A)The marginal propensity to import is typically smaller than the marginal propensity to consume because when income rises, not all goods we consume are imported.
• B)The marginal propensity to import is always larger than the marginal propensity to consume because when income rises, not all goods we consume are imported.
• C)The marginal propensity to import is always the same as the marginal propensity to consume because when income rises, not all goods we import are consumed.
• D)The sum of the marginal propensity to import and the marginal propensity to consume is always equal to one because when income rises, we either consume or import.
• E)The marginal propensity to import is sometimes larger and sometimes smaller than the marginal propensity to consume because when income rises, all goods we consume are imported.

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Definitions:

Domestic Corporations

Companies that are incorporated and operate within the legal boundaries of a country.

Excess Fair Value

The amount by which the fair value of an asset exceeds its carrying value on the balance sheet, often recognized during business combinations.

Franchise Contract

A legal agreement granting a franchisee the rights to operate a business under the franchisor's brand and operational model in exchange for fees or royalties.

Noncontrolling Interest

Noncontrolling interest is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent company, which is reported in the consolidated financial statements of the parent company.