Here Is a Consumption Function: C = C₀ + MPC(Y_d)

question 42

Multiple Choice

Here is a consumption function: C = C₀ + MPC(Y_d) .If C₀ = $200,then we know that

• A) if Y_d is zero,C will be $200.
• B) when Y_d rises,C rises by $200.
• C) when Y_d falls,C falls by MPC times C₀.
• D) C will always equal C_0.

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Definitions:

Paid-In Capital

Funds contributed by shareholders in exchange for shares of stock, representing a source of equity financing for a company.

Preferred Stock

Preferred stock is a type of stock that grants holders specific privileges over common stockholders, typically including priority in dividend payments and asset liquidation.

Stockholders' Equity

Represents the owners' residual interest in the assets of a corporation after deducting liabilities, often detailed in the equity section of the balance sheet.

Capital Surplus

Excess amount received by a company over the par value of its stock, reflected in the shareholders' equity section of the balance sheet.