If a Household's Income Falls from $26,000 to $24,000 and Its

question 40

Multiple Choice

If a household's income falls from $26,000 to $24,000 and its saving falls from $1,000 to $500,then its

• A)marginal propensity to consume is 0.98
• B)marginal propensity to consume is 1.33
• C)marginal propensity to consume is 0.75
• D)marginal propensity to save is 0.02
• E)marginal propensity to save is 0.4

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Definitions:

Agricultural Surpluses

The production of agricultural goods that exceeds the immediate needs of the population, leading to stockpiling or exports.

Suburbanization

The process whereby populations move from urban areas to suburbs, leading to the growth of residential areas on the outskirts of cities.

Middle-Class Americans

A socioeconomic group consisting of people who fall between the working class and the upper class within the American society, often characterized by moderate levels of income and education.

Inner Cities

Urban areas close to the downtown or central business district, often characterized by high population density and varying degrees of economic and social challenges.