Generally Speaking, the Greater the MPS, the

question 48

Multiple Choice

Generally speaking, the greater the MPS, the

• A)smaller would be the increase in income which results from an increase in consumption spending.
• B)larger would be the increase in income which results from an increase in consumption spending.
• C)larger would be the increase in income which results from a decrease in consumption spending.
• D)smaller would be the increase in income which results from a decrease in consumption spending.

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Definitions:

Maximize Utility

The economic principle that individuals or firms seek to achieve the highest level of satisfaction or profit from their actions and choices.

Household Objective

Household objective often refers to the financial or lifestyle goals and priorities set by a household, such as achieving savings, buying a home, or securing education for children.

Wealth

The total value of all financial assets and physical possessions owned by an individual, household, or nation, exceeding all its liabilities.

Opportunity Cost

The cost of foregone alternatives, the value of the best alternative given up when a decision is made to choose one option over another.