A Given Change in Disposable Income Would Have the Greatest

question 50

Multiple Choice

A given change in disposable income would have the greatest effect on aggregate demand with which of the following marginal propensities to consume?

• A)​0.4
• B)​0.6
• C)​0.8
• D)​0.2

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Definitions:

Input Prices

The cost of resources used in the production of goods or services, such as raw materials, labor, and overhead.

Production Function

A mathematical representation showing the relationship between input factors of production and the output of goods or services.

Lowest Cost

The minimal expense incurred in the production or procurement of goods or services, under efficient conditions.

Output

The quantity of goods or services produced within a given time period.