Here Is a Consumption Function: C = C₀ + MPC(Y_d)

question 53

Multiple Choice

Here is a consumption function: C = C₀ + MPC(Y_d) .If consumption is $3,000,MPC =0.80,and disposable income is $2,900,what does autonomous consumption equal?

• A) $100
• B) $5,900
• C) $680
• D) $500
• E) none of the above

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Definitions:

Short-Run

A period where at least one factor of production is fixed, and firms can only adjust the variable factors.

Diminishing Marginal Returns

A principle stating that as an investment in a particular area increases, the rate of profit from that investment, after a certain point, starts to decrease.

Monitoring

The regular observation and recording of activities taking place in a project or program, for oversight and evaluation purposes.

Complexity

Describes a system or problem that involves numerous parts or components interconnected in a way that makes prediction, understanding, or modeling challenging.