The Following Questions Refer to the Graph Below

question 37

Multiple Choice

The Following Questions Refer to the graph below.
-An increase in rent that leads to increased profitability of producing rental housing will lead to which of the following shifts in the long run?

• A)DD to D₁D₁
• B)D₁D₁ to DD
• C)S₁S₁ to SS
• D)SS to S₁S₁
• E)None of the above

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Definitions:

Disposable Income

After income taxes are taken out, disposable income represents the funds available to a household or individual for saving and spending purposes.

APS

Average Propensity to Save, which is the fraction of total income that is saved by an economy or individual.

Income

The financial gain received by an individual or entity, usually in the form of wages, salaries, or returns from investments.

MPC

Marginal Propensity to Consume, which indicates the proportion of additional income that a household is likely to spend on consumption rather than saving.