How Is the MPC Defined

question 70

Multiple Choice

How is the MPC defined?

• A)It is the fraction of a change in income which is not spent.
• B)It is the fraction of a change in consumption that results from a change in income.
• C)It is the fraction of total income which is not consumed.
• D)It is the fraction of total income which is consumed.
• E)It is the fraction of a change in the level of income that results from a change in consumption.

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Definitions:

Using Sinking Fund

The practice of setting aside money over time into a separate account to repay debt or replace a major asset in the future, thus avoiding a large lump-sum expense.

Market Value

Market value is the amount for which something can be sold in a given market at a particular time.

Redemption Value

The price per share a corporation pays to redeem or retire capital stock.

Preferred Stock

Class of capital stock that has preference to a corporation’s profits and assets.