Which of the Following Changes in Disposable Income Would Lead

question 11

Multiple Choice

Which of the following changes in disposable income would lead to the smallest increase in consumption?

• A)​a $20,000 increase in disposable income, if MPC equals 0.5
• B)​a $12,000 increase in disposable income, if MPC equals 0.75
• C)​a $15,000 increase in disposable income, if MPC equals 0.6
• D)​a $30,000 increase in disposable income, if MPC equals 0.25

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Definitions:

Required Rate of Return

The minimum annual percentage return an investor expects to receive from an investment, considering its risk.

NPV

Net Present Value; a calculation used to assess the profitability of an investment by summing the present values of incoming and outgoing cash flows.

CCA Class

In Canadian taxation, a classification system for capital cost allowance that categorizes assets for depreciation purposes.

Erosion Cost

Costs incurred from the gradual loss or diminishing in value of an asset over time.