If Your Income Increases from $30,000 to $35,000 and Your

question 112

Multiple Choice

If your income increases from $30,000 to $35,000 and your consumption increases from $11,000 to $12,000, your marginal propensity to consume (MPC) is:

• A) 0.2.
• B) 0.4.
• C) 0.5.
• D) 0.8.
• E) 1.0.

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Definitions:

Marginal Investor

A marginal investor is a representative investor whose actions reflect the overall market sentiment and whose transactions can affect a security's price.

Common Share

Equity ownership in a company, providing voting rights and entitling the shareholder to a share of the company's success through dividends and/or capital appreciation.

Dual-Class Shares

Sometimes created by a firm to meet special needs and circumstances. Generally, when special classifications of stock are used, one type is designated “Class A,” another as “Class B,” and so on. For example, Class A might be entitled to receive dividends before dividends can be paid on Class B stock. Class B might have the exclusive right to vote.

Voting Control

The power held by a shareholder or group of shareholders who possess a sufficient number of voting shares to influence or direct the management and decisions of a company.