If Consumption Increases by $9 When After-Tax Disposable Income Increases

question 57

Multiple Choice

If consumption increases by $9 when after-tax disposable income increases by $10, the marginal propensity to consume (mpc) equals:

• A) 0.1.
• B) 0.9.
• C) 1.0.
• D) 9.0.

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Definitions:

Y Axis

The vertical line in a graph or chart that typically represents the dependent variable.

Equilibrium Price

The point where the volume of goods being offered equals the volume of goods being sought in terms of price.

Demand

The amount of a product or service that buyers are ready and capable of buying at different price levels over a specific time.

Supply

The aggregate supply of a service or good ready for consumer purchase.