Refer to the Given Consumption Schedules

question 84

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

• A) is highest in economy (1).
• B) is highest in economy (2).
• C) is highest in economy (3).
• D) cannot be calculated from the data given.

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Definitions:

Leverage

The use of borrowed funds or financial instruments to increase the potential return of an investment, which can also magnify the potential for loss.

Marking to Market

The process of adjusting the value of an asset to its current market level rather than its book value or original cost.

Margin Calls

A broker's demand on an investor to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin.

Gains

The increase in value of an asset or investment, measured as the difference between the sale price and the purchase price.