If a $1,000 Increase in Income Leads to a $750

question 262

Multiple Choice

If a $1,000 increase in income leads to a $750 increase in consumption expenditures, then the marginal propensity to consume is

• A)0.75 and the multiplier is 1 1/3.
• B)0.75 and the multiplier is 4.
• C)0.25 and the multiplier is 1 1/3.
• D)0.25 and the multiplier is 4.

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Definitions:

Consideration

An item of value traded between entities within an agreement to make the contract enforceable by law.

Adhesion

A contract or agreement created by one party with significant power over the other, often leading to a lack of negotiation for the weaker party.

Negotiate Terms

The process of discussing and agreeing on the specific conditions or clauses of a contract or agreement.

Consented

refers to the agreement or permission given by a party fully and without coercion.