Data on After-Tax Income and Consumption Spending for the Adam

question 72

Multiple Choice

Data on after-tax income and consumption spending for the Adam Smith family are given below: Based on these data, the Adam Smith family has a marginal propensity to consume equal to:

• A) 0.9.
• B) 0.8.
• C) 0.75.
• D) 0.6.

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Definitions:

Insolvent Company

A business that is unable to pay its debts as they come due.

Preserve Estate

The process of managing and protecting an individual's assets during their lifetime and ensuring the efficient distribution of those assets after death.

Liquidate

The process of converting assets into cash or cash equivalents by selling them, often done in the context of dissolving a business or paying off debt.

Operating Losses

Financial losses that occur when a company's operating expenses exceed its revenues during a given period, excluding gains or losses from investments or extraordinary items.