Suppose a Family's Consumption Exceeds Its Disposable Income

question 23

Multiple Choice

Suppose a family's consumption exceeds its disposable income. This means that its

• A) MPC is greater than 1.
• B) MPS is negative.
• C) APC is greater than 1.
• D) APS is positive.

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Definitions:

Common Stock

Equity ownership in a corporation, giving holders voting rights and a residual claim on corporate earnings via dividends.

Option's Value

The intrinsic and time value associated with an options contract, determining its worth on the market.

Option

A financial derivative that provides the buyer the right, but not the obligation, to buy or sell an asset at an agreed-upon price within a certain period.

Lower Bound

The minimum level that an economic or financial variable can achieve, often used in the context of interest rates.