Table 20-10 -Refer to Table 20-10. Suppose an Economy Has Only Three

question 228

Multiple Choice

Table 20-10

-Refer to Table 20-10. Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2013 is the base year, then what is the CPI for 2018?

• A) 14.3
• B) 87.5
• C) 114.3
• D) 160

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Definitions:

Disposable Income

The financial resources families have for expenditures and savings after income taxes are removed.

Disposable Income

The total funds available to families for spending and saving after subtracting income tax.

Transfer Payments

Payments made by governments to individuals without any expectation of a good or service in return, such as welfare or unemployment benefits.

Marginal Propensity

This measures the likelihood of an individual or entity to spend an additional unit of currency. Specifically, it assesses how changes in income affect spending or saving habits.