If the MPC Equals 0.75, Then

question 428

Multiple Choice

If the MPC equals 0.75, then

• A) for every $100 increase in consumption expenditure, disposable income increases by $75.
• B) consumption expenditure is always more than disposable income.
• C) for every $100 increase in disposable income, saving increases by $75.
• D) for every $100 increase in disposable income, saving increases by $25.

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Definitions:

Parity Ratio

A ratio that compares the prices of a set of goods in one area or country to the prices of the same goods in another to measure purchasing power or competitiveness.

Parity Ratio

An index or ratio comparing the level of one economic indicator to another, generally used in agriculture to compare prices.

Base Period

A specific time period used as a benchmark for comparing economic or financial data, such as in calculating inflation rates or index numbers.

Prices Received

The amount of money that producers get for selling one unit of a good or service, reflecting the market value from the perspective of sellers.