The Marginal Propensity to Consume

question 43

Multiple Choice

The marginal propensity to consume

• A)is equal to zero when disposable income equals consumption expenditure.
• B)is equal to 1 minus the slope of the saving function.
• C)is negative when saving is positive.
• D)increases as the economy moves upward along the consumption function.
• E)is greater than the slope of the 45-degree line.

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Definitions:

Positive Externalities

Benefits that result from a commercial activity experienced by others who are not directly involved in the transaction or activity.

Spillover Benefits

The positive effects experienced by third parties or the wider community from an economic transaction or activity, which are not reflected in the market price.

Pollution Abatement

Measures and processes implemented to reduce, control, or eliminate pollution from various sources in order to protect the environment.

Marginal Benefit

The extra enjoyment or value derived from the consumption of one more unit of a product or service.