The Amount by Which Consumption Increases When Disposable Income Increases

question 200

Multiple Choice

The amount by which consumption increases when disposable income increases by $1 is called

• A) an automatic stabilizer.
• B) the consumption function expenditure.
• C) the marginal propensity to consume.
• D) the income-expenditure multiplier.
• E) autonomous planned aggregatE.

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Definitions:

Break-Even Time

The period required for financial returns to cover the initial investment or costs, reaching a point where no profit or loss is incurred.

Payback Method

The payback method is a capital budgeting technique that calculates the time required to recoup the cost of an investment, focusing on cash flow and ignoring the time value of money.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in alignment with the company's goal of wealth maximization.

Financial Institution

An establishment that conducts financial transactions such as investments, loans, and deposits.