If Disposable Income Increases by $400 Billion and Consumption Increases

question 54

Multiple Choice

If disposable income increases by $400 billion and consumption increases by $300 billion, the MPC equals

• A)0.75.
• B)0.60.
• C)0.80.
• D)0.68.

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Definitions:

Nonrivalry

A characteristic of a good where one person's consumption does not diminish the ability of others to consume the same good.

Public Good

A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Voluntarily Pay

Refers to making a payment or contribution freely without coercion, typically in contexts where payments are not legally mandated.

Marginal Cost

The incremental cost of producing an extra unit of a good or service.