FIGURE 21-1 -Refer to Figure 21-1.If Disposable Income Is Zero,then

question 36

Multiple Choice

FIGURE 21-1
-Refer to Figure 21-1.If disposable income is zero,then

• A)autonomous desired consumption is 0A.
• B)autonomous desired consumption is 0Y₁.
• C)desired consumption must also be zero.
• D)the level of desired saving will be 0A.
• E)autonomous desired saving will be 0A.

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Definitions:

Retained Earnings

The portion of net earnings kept by the company instead of being paid out to its shareholders in the form of dividends.

Equity

The value of ownership interest in a firm, calculated as the difference between assets and liabilities on a company’s balance sheet.

Dividends

Payments made by a corporation to its shareholders, often derived from profits, on a per-share basis.

Return on Assets

A financial ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.