If the Marginal Propensity to Save Is 0

question 97

Multiple Choice

If the marginal propensity to save is 0.2 and income rises by $5,000, how much of this $5,000 will be consumed?

• A) $625
• B) $1,000
• C) $4,000
• D) $5,000

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Definitions:

Stockholders' Equity

The owners' residual interest in a corporation, calculated as the difference between assets and liabilities.

Stockholders' Equity

The amount of capital given to a company by its shareholders, plus retained earnings or minus the company's accumulated losses.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, showing assets, liabilities, and equity at a specific point in time.

Common Stock

Common stock represents ownership shares in a corporation, providing voting rights and potential dividends to shareholders.