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:

Return on Common Stockholders' Equity

A measure of profitability that indicates how much profit a company generates with the money shareholders have invested, expressed as a percentage.

Asset Turnover

A profitability ratio that measures how effectively a business is using its assets to generate sales, computed as sales divided by average total assets (excluding long-term investments).

Dividend Yield

The dividend per share a company pays out to its shareholders annually, expressed as a percentage of the stock's current market price.

Return on Stockholders' Equity

A financial ratio that measures the profitability of a corporation in relation to stockholders' equity, indicating how efficiently equity is being utilized.