If the Marginal Propensity to Consume (MPC) Is 0

question 60

True/False

If the marginal propensity to consume (MPC) is 0.80, the value of the spending multiplier is 2.

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Definitions:

Preemptive Rights

The right of existing shareholders to maintain their proportional ownership in a company by purchasing a proportional number of new shares before the company offers them to the public.

Treasury Stock

Treasury Stock refers to shares that were issued and subsequently repurchased by the issuing company, reducing the amount of outstanding stock on the open market.

Authorized Stock

The total number of shares a corporation is legally allowed to issue, as defined in its articles of incorporation.

Treasury Stock

Shares that were issued by a company and later reacquired. These shares do not pay dividends or have voting rights while held by the company.