If Disposable Income Is $350 Billion and the Average Propensity

question 186

True/False

If disposable income is $350 billion and the average propensity to consume is 0.80, then personal saving is $70 billion.

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Definitions:

Zero-Coupon Bond

A bond that does not pay interest during its life but is sold at a discount from its redemption value.

Interest Paid

The amount of money paid over a period for the use of borrowed funds.

Issue Price

The price at which new or existing securities are offered for sale to the public.

Disaster Bonds

Financial instruments that are issued to provide insurance companies with liquidity in the event of a disaster, transferring the risk to investors.