Suppose an Economy's Consumption Schedule Shifts from C₁ to C

question 27

Multiple Choice

Suppose an economy's consumption schedule shifts from C₁ to C ₂ as shown in the diagram below. We can say that its:

• A) MPC has increased but its APC at each income level is unchanged.
• B) APC at each income level is increased but its MPC is unchanged.
• C) MPC and APC at each income level have both increased.
• D) MPC and APC at each income level have both decreased.

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Definitions:

Birthday Present

A gift given to someone on the anniversary of their birth.

Insolvent

Insolvent denotes a state in which an individual or organization is unable to meet its financial obligations as debts become due because its liabilities exceed its assets.

Promises to Give Gifts

Commitments made by one person to give something to another without expecting anything in return.

Suing

The act of bringing a lawsuit against an individual or entity, seeking legal remedy for grievances.