If Consumption Expenditure for a Household Increases from $300 to $500

question 26

Multiple Choice

If consumption expenditure for a household increases from $300 to $500 when disposable income increases from $200 to $500, the marginal propensity to consume is

• A)equal to 1.
• B)equal to 0.75.
• C)equal to 1.33.
• D)negative.
• E)equal to 0.67.

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Definitions:

Industrial Countries

Nations with highly developed economies, characterized by significant industrial activity, advanced technological infrastructure, and higher standards of living.

Percentage

A proportion or part in relation to a whole, represented as a fraction of 100.

Water-Soluble Material

A substance that can dissolve in water, making it capable of being washed away or diluted in aqueous solutions.

Invention

The creation of a new product, process, or idea.