If the Marginal Propensity to Save Is 0

question 363

Multiple Choice

If the marginal propensity to save is 0.6, then the marginal propensity to consume is

• A) 0.6.
• B) 0.4.
• C) 1.0.
• D) More information is needed in order to calculate the correct answer.

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Definitions:

Common Equity

The amount of ownership in a corporation that is held by common shareholders, represented by the value of common stock plus retained earnings.

Year-end Balance Sheets

Financial statements detailing a company's assets, liabilities, and equity at the end of a fiscal year.

Retained Earnings

Profits that a company retains rather than distributes to its shareholders as dividends, often used for reinvestment.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss of value over time.