If Income Increased by $20,000,investment Spending Is Fixed at $5,000,government

question 66

Multiple Choice

If income increased by $20,000,investment spending is fixed at $5,000,government purchases are fixed at $10,000,net exports are fixed at $500,and aggregate expenditure increases by $15,000,what is the marginal propensity to consume (MPC) ?

• A) 0.25
• B) 0.75
• C) 0.33
• D) 0.50
• E) 0.70

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Definitions:

GAAP

Generally Accepted Accounting Principles, a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.

Segment Assets

Assets that are allocated to a company's operational segments or divisions for the purpose of financial reporting.

Price/Earnings Ratio

A valuation metric for a company that measures its current share price relative to its per-share earnings.

Preferred Dividends

Payments made to preferred shareholders, often at a fixed rate, that take precedence over dividends to common shareholders.