The Average Propensity to Consume Is the

question 3

Multiple Choice

The average propensity to consume is the

• A) fraction of an extra dollar of GDP that becomes disposable income.
• B) share of GDP spent by households and businesses.
• C) proportion of an extra dollar of disposable income that is spent on consumption.
• D) percentage of disposable income that is consumed.
• E) reciprocal of the marginal propensity to consume.

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Definitions:

Psychophysics

The scientific study of the relationship between stimuli (which are physical) and the sensations and perceptions they produce in the observer.

Physical Energy

The capacity to perform work or to produce physical changes within the body or environment, stemming from physical or chemical resources.

Sensory Physiology

The study of how organisms perceive and respond to physical stimuli in their environment through sensory organs.

Constant Stimuli

A method in psychophysics used to measure the sensitivity of sensory systems by presenting stimuli of constant intensity but differing in duration or frequency.