The Marginal Propensity to Consume

question 43

Multiple Choice

The marginal propensity to consume

• A)is equal to zero when disposable income equals consumption expenditure.
• B)is equal to 1 minus the slope of the saving function.
• C)is negative when saving is positive.
• D)increases as the economy moves upward along the consumption function.
• E)is greater than the slope of the 45-degree line.

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Definitions:

"New Normal"

Describes a previously unfamiliar situation that has become standard or expected, often used in the context of changes in societal or economic conditions.

Production Sectors

The division of an economy into different groups or areas of production, such as agriculture, manufacturing, and services.

Planning Fallacy

The tendency for people and organizations to underestimate the time, costs, and risks of future actions and overestimate the benefits.

Bottlenecks

Points of congestion or blockage in a production process or system that lead to inefficiencies and delays.