Refer to the Given Consumption Schedules

question 189

Multiple Choice

Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. The marginal propensity to consume in
Economy (1) is

• A) 0.5.
• B) 0.3.
• C) 0.8.
• D) 0.7.

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Definitions:

Rate of Return

The percentage of profit or loss on an investment over a specific period, expressing the gain or loss relative to the investment's initial cost.

Small-firm Stocks

Equity securities of companies with a smaller market capitalization, often characterized by higher volatility and potential for growth compared to larger companies.

Efficient Market

A market theory suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Holding Period

The duration for which an investment is held by an investor before being sold.