If the Marginal Propensity to Consume Is 0

question 136

Multiple Choice

If the marginal propensity to consume is 0.75, then a $100 increase in disposable income leads to a ________ increase in consumption.

• A)$13.33
• B)$25
• C)$75
• D)$133

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Definitions:

Payback

The period it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Internal Rate Of Return

A metric used in financial analysis to estimate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows equal to zero.

Initial Cost

Initial cost refers to the expense incurred to purchase an asset or start a project, including the acquisition price and any additional costs necessary to bring the asset to a usable state.

Ether

A class of organic compounds characterized by an oxygen atom connected to two alkyl or aryl groups, often used as solvents or anesthetics.