If National Income Increases by $75 Million and Consumption Increases

question 54

Multiple Choice

If national income increases by $75 million and consumption increases by $15 million, the marginal propensity to consume is

• A)5.
• B)0.80.
• C)0.75.
• D)0.20.
• E)0.15.

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Definitions:

Financially Shaky Corporations

Companies that are experiencing financial instability or distress, potentially leading to increased risk for investors and creditors.

Financial Intermediaries

Institutions that act as middlemen between savers and borrowers, facilitating the flow of funds in the financial system, such as banks and investment companies.

Maturity

The point in time when a financial instrument, such as a bond or loan, reaches its due date and the principal must be repaid.

Bond

A fixed income investment in which an investor loans money to an entity that borrows the funds for a defined period at a variable or fixed interest rate.