Suppose the Graph Shown Depicts the Demand for a Normal

question 49

Multiple Choice

Suppose the graph shown depicts the demand for a normal good. A movement from A to C might be caused by:

• A) an increase in price.
• B) a decrease in price.
• C) an increase in income.
• D) a decrease in income.

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Definitions:

Disposable Income

The amount of money an individual or household has available to spend or save after income taxes have been deducted.

Disposable Income

Money that becomes available for household savings and expenditures after income taxes are subtracted.

MPS

Marginal Propensity to Save, which is the proportion of an increase in income that is saved rather than spent on consumption.

Saving

The process of setting aside a portion of current income for future use, typically in the form of investments or deposit accounts.