The Marginal Propensity to Consume Refers to

question 12

Multiple Choice

The marginal propensity to consume refers to

• A) the additional saving that occurs out of an additional dollar of disposable income.
• B) the additional consumption expenditure that occurs out of an additional dollar of disposable income.
• C) the additional consumption expenditure that occurs out of an additional dollar of investment.
• D) total consumption expenditure divided by total disposable income.

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Definitions:

Effective Interest

The real cost of borrowing or the actual interest rate earned, considering compounding and fees.

Amortize Discount

The gradual reduction of a bond discount over the life of the bond, expensed as interest over the period.

Straight-Line Method

The Straight-Line Method is a way of calculating depreciation of an asset, where the asset's cost is evenly spread over its useful life.

Other Than Temporary

Classification of impairments or losses indicating that the reduction in value is not expected to reverse in the near future.