If the MPC Equals 0.75, Then

question 428

Multiple Choice

If the MPC equals 0.75, then

• A) for every $100 increase in consumption expenditure, disposable income increases by $75.
• B) consumption expenditure is always more than disposable income.
• C) for every $100 increase in disposable income, saving increases by $75.
• D) for every $100 increase in disposable income, saving increases by $25.

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Definitions:

Principal

Principal refers to the original sum of money borrowed in a loan or invested, exclusive of any interest or dividends.

Annual Payments

Periodic payments made once every year, often used in terms of loans, insurance, and investments.

Outstanding Balance

The amount of money owed on a loan or credit line that has not yet been repaid.

Single Premium Annuity

A financial product where a lump sum payment is made initially in exchange for a series of payments that will be received at future dates.