The Marginal Propensity to Consume

question 16

Multiple Choice

The marginal propensity to consume:

• A)is the proportion of disposable income that is consumed.
• B)is the ratio of disposable income to consumption.
• C)is the change in consumption relative to a change in disposable income.
• D)minus the marginal propensity to save must equal 1.
• E)is greater than 1 at all levels of income.

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Definitions:

Tax Laws

Legislation that determines how much individuals and businesses must pay the government from their income and financial transactions.

Dividends

Payments made by a corporation to its shareholder members, representing a portion of the corporation's earnings.

Shareholders

Shareholders are individuals or institutions that legally own one or more shares of stock in a public or private corporation, making them partial owners of the company.

Summarized Financial

Financial statements that present a concise overview of a company's financial position and performance, without detailed disclosures.