The Marginal Propensity to Consume Is Equal to

question 462

Multiple Choice

The marginal propensity to consume is equal to

• A) what people spend out of total disposable income.
• B) the desired amount of consumption expenditure as a proportion of disposable income.
• C) the average, after-tax consumption amount.
• D) the change in consumption expenditure resulting from a change in disposable income.

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Definitions:

Ricardian Model

A model in international trade theory that explains international trade patterns based on comparative advantage.

Production Possibility Frontiers

A curve depicting all maximum output possibilities for two goods, given a set of inputs resources, and technology, illustrating the trade-offs in production choices.

Opportunity Cost

Forgoing possible benefits from other options by selecting a particular one.

Straight Lines

Lines in a geometric space that have the same direction throughout and no curvature.