Use the Following to Answer Questions

question 172

Multiple Choice

Use the following to answer questions .
Exhibit: Consumption and Disposable Personal Income
-(Exhibit: Consumption and Disposable Personal Income) Assuming that the relationship between consumption and disposable personal income remains linear throughout its entire range, if disposable personal income were zero, what would personal saving be?

• A) −$200 billion
• B) $0
• C) $200 billion
• D) $400 billion

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Definitions:

Debt-equity Ratio

An analysis ratio that shows how a company’s assets are financed through a combination of equity and debt.

Debt-to-asset Ratio

A financial ratio comparing the total debt of a company to its total assets, indicating how much of the company's assets are financed through debt.

Static Theory

A theoretical or analytical approach that assumes variables do not change over time or are observed at a single point in time, ignoring dynamics and fluctuations.

Capital Structure

The combination of borrowing and ownership capital that a business employs to fund its activities and expansion.