When the Marginal Propensity to Consume Is Less Than 1

question 131

Multiple Choice

When the marginal propensity to consume is less than 1, the

• A) average propensity to consume is greater than 1.
• B) average propensity to save is greater than 1.
• C) marginal propensity to save is negative.
• D) marginal propensity to save is positive.

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Definitions:

Raw Materials

The basic material from which a product is made, often used in manufacturing and production processes.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales.

Variable Costs

Costs that vary directly with the level of production or output.

Fixed Costs

Expenses that do not change with the level of goods or services produced over a short period.