The Parity Ratio Initially Stood at 0

question 201

Multiple Choice

The parity ratio initially stood at 0.50. Then after several years, the prices received by farmers doubled while the prices they paid tripled. This will bring the parity ratio to

• A) 0.25.
• B) 0.33.
• C) 0.75.
• D) 0.80.

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Definitions:

Disposable Income

Refers to the funds that individuals can spend or save after all income taxes are deducted.

Total Consumption

The aggregate amount of goods and services consumed in an economy, including individual and governmental consumption.

Saving

The portion of income not spent on current expenditures or taxes, often put aside for future use or investment.

Induced Consumption

Consumer spending that varies with income levels; as income rises, consumption increases, and as income falls, consumption decreases.