If Disposable Income Increases by $100 Million, and Consumption Increases

question 3

Multiple Choice

If disposable income increases by $100 million, and consumption increases by $90 million, then the marginal propensity to consume is

• A)0.9.
• B)0.8.
• C)0.75.
• D)0.6.
• E)0.5.

---

Definitions:

Complete

Fully accomplished or having all necessary parts or steps.

Transitivity

Transitivity in decision making refers to the consistency among choices, where if option A is preferred over B and B over C, then A should be preferred over C.

Indifference Curves

Graphical representations used in microeconomics to show different combinations of two goods that give a consumer equal satisfaction and utility.

Marginal Rate

Marginal Rate often refers to the additional cost or benefit associated with a slight increase in production or activity, influencing decisions in finance and economics.