If Disposable Income Increases by $100 and Saving Increased by $25,ceteris

question 67

Multiple Choice

If disposable income increases by $100 and saving increased by $25,ceteris paribus,we may conclude that

• A)the marginal propensity to consume is 0.25.
• B)the marginal propensity to save is 0.25.
• C)$15 is autonomous consumption.
• D)a change in disposable income is induced by a change in consumption.

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Definitions:

Total Revenue

The full amount of income generated by the sale of goods or services before any costs or expenses are deducted.

Net Income

The total earnings of a company or individual after deducting expenses, taxes, and deductions.

Gross Profit

The financial difference between revenue and the cost of goods sold (COGS), indicating the efficiency of a business in managing its direct costs.

Cost of Goods Sold

An accounting term representing the direct costs attributable to the production of the goods sold by a company.