Suppose That When Disposable Income Rises from $3 Trillion to $3.2

question 165

Multiple Choice

Suppose that when disposable income rises from $3 trillion to $3.2 trillion,consumption rises from $2.5 trillion to $2.6 trillion.What is the marginal propensity to consume?

• A)0.1
• B)0.2
• C)0.5
• D)0.8
• E)0.9

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Definitions:

Dividends

These are distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Shareholders

Individuals or entities that own shares in a corporation, thus having an interest in its performance and profitability.

Corporation

A legal entity that is separate from its owners, providing them with limited liability, and has the ability to own assets, incur liabilities, and sell shares.

Interest Rate

The percentage charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.