Using Real National Income on the Horizontal Axis Instead of Real

question 6

Multiple Choice

Using real national income on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.75 generates for every additional $100 of real national income

• A)$75 of additional real disposable income.
• B)$25 of additional saving.
• C)$56.25 of additional consumption spending.
• D)$25 of additional saving and taxes.

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Definitions:

Short Run

A time period in economics during which at least one input is fixed while others may be variable, affecting the production and costs of a business.

Long Run

In economics, the long run refers to a period in which all inputs or factors of production can be varied and no costs are fixed.

Capital Intensity Ratio

A metric that measures the amount of assets required to generate a dollar of revenue, indicating how much capital is invested in production.

Total Liabilities

The combined debts and obligations that a company or individual owes to outside parties, indicating the total amount owed.