If Income Is $5,000 Per Month and Consumption Spending Is

question 133

Multiple Choice

If income is $5,000 per month and consumption spending is $4,500 per month, what is the average propensity to consume?

• A) 0.9
• B) 1.11
• C) 500
• D) -500

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Definitions:

Flotation Cost

The total costs that a company faces when it issues new securities, including underwriting fees, legal fees, and registration fees.

Retained Earnings

Cumulative net earnings not distributed as dividends to shareholders, but instead reinvested in the business.

Inflation

The pace at which prices for goods and services across the board go up, diminishing the value of money.

Required Rate

The minimum return an investor expects to achieve on an investment, considering its risk level and the opportunity cost of forgoing other investments.