Which of the Following Best Expresses the Relationship Between the Marginal

question 10

Multiple Choice

Which of the following best expresses the relationship between the marginal propensity to consume (MPC ) and the average propensity to consume (APC ) ?

• A) The APC equals 1 minus the MPC.
• B) The APC equals the change in personal consumption divided by the change in disposable income; the MPC is the proportion of disposable income consumed.
• C) The APC is the proportion of total income consumed; the MPC is the proportion of the additional income consumed.
• D) The APC can never exceed the value 1; the MPC can exceed 1 at low income levels.
• E) The MPC deals with the consumption behavior of a household; the APC deals with the consumption behavior of society.

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Definitions:

Globalization

Refers to the process of interaction and integration among people, companies, and governments worldwide, leading to the exchange of ideas, products, and cultures.

Diversification

Diversification is the strategy of entering into new markets or creating new products to spread risk and reduce dependence on a single source of income or success.

Command Economy

An economic system wherein the government or central authority makes all decisions regarding the production and distribution of goods and services.

Global South

A term referring to countries primarily located in the Southern Hemisphere, often focusing on regions in Africa, Latin America, Asia, and the Middle East, highlighting developmental and economic disparities.