When Jack's Income Increases by $1,000,he Spends an Additional $850

question 167

True/False

When Jack's income increases by $1,000,he spends an additional $850 dollars.This implies that his marginal propensity to save is 0.85.

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Definitions:

Firm Commitment

A guarantee given by an underwriter to purchase all the unsold shares in an initial public offering or a secondary offering.

Financial Responsibility

The ability to manage one's financial resources wisely, including saving, investing, and spending in a manner that ensures long-term financial stability.

Syndicate Buys

Refers to a group of investors or underwriters pooling together to buy the entire or a large portion of a new securities issue for resale.

Dutch Auction

A method of public offering in which the price of the offering is set after taking in all bids and determining the highest price at which the total offering can be sold.