(Table) When Disposable Income Increases from $1,000 to $1,200, What

question 29

Multiple Choice

(Table) When disposable income increases from $1,000 to $1,200, what is the value of the marginal propensity to save?

• A) -0.5
• B) 0.5
• C) -1.5
• D) 1.5

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Definitions:

Paasche Index

A price index that measures the cost of purchasing a given market basket of goods and services in a certain year, compared to the cost of purchasing the same goods and services in a base year, with the quantities used in weighting the prices coming from the year of interest rather than the base year.

Ideal Cost-Of-Living Index

A theoretical measure that tracks the changes in the amount required to maintain a constant standard of living over a period.

Ideal Cost-Of-Living Index

A theoretical measure representing the change in the amount of money needed to maintain a certain standard of living.

Utility

A measure of satisfaction or happiness that a consumer receives from consuming goods and services.