Based on Our Understanding of Consumption and Saving,we Know That

question 44

Multiple Choice

Based on our understanding of consumption and saving,we know that the marginal propensity to consume and the marginal propensity to save must

• A)be equal to each other.
• B)sum to exactly one.
• C)sum to less than one.
• D)sum to more than one.
• E) be equal to the multiplier.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent or salaries.

Marginal Costs

The added cost of producing one additional unit of a product or service.

Indifferent

A state of having no preference between two or more options, showing neither favor nor disfavor.

Variable Costs

Costs that vary directly with the level of production or sales volume.