The Disposable Income (DI) and Consumption (C) Schedules Are for a Private

question 104

Multiple Choice

The disposable income (DI) and consumption (C) schedules are for a private, closed economy. All figures are in billions of dollars. Refer to the data above. If consumption increases by $10 billion at each level of disposable income, the marginal propensity to consume will:

• A) Change, but the average propensity to consume will not change
• B) Change, and the average propensity to consume will change
• C) Not change, but the average propensity to consume will change
• D) Not change, and the average propensity to consume will not change

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Definitions:

Price Control

Price Control is a government policy or legal stipulation that sets limits on the prices that can be charged for goods and services in a market.

Government

The body or system through which a community, state, or nation is governed, providing order, security, and services to its population.

Market Price

The current price at which an asset or service can be bought or sold in a given market.

Rent Controls

Government-imposed limits on the amount landlords can charge for renting out their property, typically aimed at making housing more affordable.