If the Marginal Propensity to Consumer Is 0

question 179

Multiple Choice

If the marginal propensity to consumer is 0.9,what is the value of the expenditure multiplier?

• A) 1.0
• B) 1.9
• C) 10
• D) 0.1
• E) 0.9

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Definitions:

Earnings

The amount of profit that a company produces during a specific period.

Signaling Effect

The signaling effect is a theory in economics and finance suggesting that actions taken by a company, such as dividend announcements or share repurchases, send signals to the market about the company’s financial health and prospects.

Stock Prices

Stock prices are the current market price at which shares of a company can be bought or sold. They fluctuate based on demand and supply, company performance, and market conditions.

Dividends

Funds distributed by a company to its shareholders, typically coming from the firm's profits.