If the Average Propensity to Consume Is Initially 1

question 161

Multiple Choice

If the average propensity to consume is initially 1.0, the marginal propensity to consume is 0.75, and real disposable income increases by $1000, the new value of saving is

• A) 0.
• B) $250.
• C) $750.
• D) $1000.

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Definitions:

North America

A continent located in the Northern Hemisphere, mostly in the Western Hemisphere, including countries such as the United States, Canada, and Mexico.

Financially Independent

The status of having enough personal wealth to live, without having to work actively for basic necessities.

Adulthood

The period in human development after adolescence, marked by full physical development, legal responsibilities, and social independence.

Endurance

The capacity to sustain a physical or mental effort for an extended period, often critical in sports, academics, and personal challenges.