If the Marginal Propensity to Consume Was 0

question 80

Multiple Choice

If the marginal propensity to consume was 0.75, it would mean that:

• A) $0.75 of an additional $1 of individuals' after-tax income is spent on consumption.
• B) $0.75 of an additional $1 of individuals' after-tax income is saved.
• C) $0.25 of an additional $1 of individuals' after-tax income is spent on consumption.
• D) None of these is true.

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Definitions:

Strip Bond

An investment instrument entitling its owner to receive only the face value of a bond at maturity.

Nominal Rate

The stated interest rate of an investment or loan, not adjusted for compounding or inflation.

Population Growth

The increase in the number of individuals in a population, often measured as the rate at which the number of individuals increases over a specific period of time.

Population Decline

A reduction in the number of people in a particular area, which could be caused by factors like low birth rates, high death rates, migration, or disease.