If Don Spends $10 000 on Consumption When He Has

question 132

Multiple Choice

If Don spends $10 000 on consumption when he has no disposable income and then spends 75 cents out of every dollar of disposable income he earns on consumption,which of the following statements about Don's consumption is the most accurate?

• A)Don's MPC equals 0.75.
• B)Don's APC will rise as his income rises.
• C)Don spends $20 000 on consumption when his disposable income is $20 000.
• D)Don's APC equals 0.75.

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Definitions:

Subtract Fractions

The operation of taking one fraction away from another, which involves finding a common denominator and then subtracting the numerators.

Simplest Form

Simplest form refers to expressing a mathematical expression or fraction in its most reduced terms, with no common factors between the numerator and the denominator.

Multiplicative Inverse

Another term for reciprocal; a number which, when multiplied by the original number, yields the multiplicative identity (1).

Negative Integer

An integer less than zero, represented by a negative sign (-) in front of a positive number.