If Consumption Increases from $500 Billion to $575 Billion and Income

question 270

Multiple Choice

If consumption increases from $500 billion to $575 billion and income increases from $600 billion to $700 billion, the marginal propensity to save is:

• A) 0.2.
• B) 0.25.
• C) 0.75.
• D) There is not enough information to answer this question.

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Definitions:

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a set price before the contract expires.

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Exercise Price

The price at which the holder of an option can buy (call option) or sell (put option) the underlying asset.

Time Value

The portion of an option's premium that is attributable to the amount of time remaining until the expiration of the option.