Suppose That When Disposable Income Increases by $1,000, Consumption Spending

question 201

Multiple Choice

Suppose that when disposable income increases by $1,000, consumption spending increases by $750. Given this information, we know that the marginal propensity to consume (MPC) is

• A) 0.25.
• B) 0.75.
• C) 1.33.
• D) 4.

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Definitions:

Nash Equilibrium

In strategic games, it refers to a scenario where all participants choose strategies that are optimal, given the strategies of all other participants.

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Time-Discounted Profits

The present value of future profits, accounting for the fact that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.