If Your Income Increases from $30,000 to $40,000 and Your

question 194

Multiple Choice

If your income increases from $30,000 to $40,000 and your savings increases from $2,000 to $4,000, your marginal propensity to save (MPS) is:

• A)0.2.
• B)0.4.
• C)0.5.
• D)0.8.
• E)1.0.

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Definitions:

Capital Account

A capital account tracks the net value of a company's assets contributed by its owners and investors plus retained earnings or minus any distributions to owners.

Ending Capital Balance

The amount of money that a company or individual has in their capital account at the end of a fiscal period, after all transactions have been accounted for.

Net Purchases

The total amount of purchases after subtracting any purchases returns, allowances, and discounts.