The Portion of Additional Income That Is Spent on Consumption

question 4

Multiple Choice

The portion of additional income that is spent on consumption is:

• A) average propensity to consume (AP
• C).
• B) marginal propensity to consume (MP
• C).
• C) marginal propensity to save (MP
• S).
• D) average propensity to save (AP
• S).
• E)1 minus marginal propensity to consume

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Definitions:

Long Run

A period in which all factors of production and costs can be varied, and all market adjustments have been made.

Per Capita GDP Growth

The rate of growth of the Gross Domestic Product (GDP) per person in a specific area, commonly used to indicate economic health and living standards.

Labor Productivity Growth

An increase in the amount of goods and services produced per hour worked by employees, which is a key determinant of economic growth and competitiveness.

Labor-Capital Ratio

The ratio of labor inputs to capital inputs in production, reflecting the relationship between the workforce and machinery or capital assets.