If the Consumption Function Is Given by C = 100

question 3

Multiple Choice

If the consumption function is given by C = 100 + 0.75(Y-T) ,then an increase of 10 units in taxes will cause the IS schedule to shift to the right by

• A)-30 units.
• B)-10 units.
• C)30 units.
• D)40 units.

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Definitions:

Dividend Yield Ratio

The dividend yield ratio is a financial metric that measures the amount of dividends a company pays out to its shareholders relative to its share price.

Book Value Per Share

The equity available to common shareholders divided by the number of outstanding shares, indicating the value per share if the company were liquidated.

Net Profit Margin

A profitability ratio calculated as net income divided by revenue, indicating the percentage of each dollar of revenue that results in net profit.

Gross Margin

Gross margin is the difference between revenue and cost of goods sold, expressed as a percentage of revenue.