Suppose That When Disposable Income Rises from $5

question 133

Multiple Choice

Suppose that when disposable income rises from $5.2 trillion to $6.0 trillion,consumption rises from $5.0 trillion to $5.6 trillion.What is the marginal propensity to save?

• A)0.25
• B)0.33
• C)0.75
• D)0.67
• E)0.07

---

Definitions:

Labor Supply

The total hours that workers are willing and able to work at a given wage rate.

Gross Demand

The total quantity of a good or service demanded across all market segments before considering supply constraints or competition.

Endowment

The initial allocation of goods, services, or wealth that an individual or entity possesses before entering any trade or transaction.

Budget Line

A graphical representation showing the combination of two goods that a consumer can afford given their income and the prices of the goods.