The Graph Above Shows the Relationship Between Consumption and Income

question 12

Multiple Choice

The graph above shows the relationship between consumption and income. Which of the following statements is correct?

• A) The marginal propensity to consume in the economy shown is greater than 1
• B) The marginal propensity to consume varies across income levels
• C) The average propensity to consume at income level K is given by KM divided by KN
• D) The marginal propensity to consume can be calculated by dividing LM by 0K

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