If the Average Propensity to Consume Is Initially 0

question 107

Multiple Choice

If the average propensity to consume is initially 0.8, the marginal propensity to consume is 0.75, and real disposable income increases by $1000, the new value of saving is

• A)$200.
• B)$250.
• C)$800.
• D)$750.

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Definitions:

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a company over a specific period, including the income statement, balance sheet, and statement of cash flows.

Audit Vulnerabilities

Areas within an organization's financial or operational processes that are most susceptible to misstatement, error, or fraud, potentially affecting the accuracy of financial statements.

Debt Repayment

The process of paying back borrowed money to lenders, either in periodic installments or a lump sum.

Equity Securities

Financial instruments indicating ownership in a company, such as stocks.