Suppose Consumption Is $60,000 When Income Is $90,000 and the MPS

question 143

Multiple Choice

Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25. When income increases to $100,000, consumption is

• A) $90,250.
• B) $85,000.
• C) $70,000.
• D) $67,500.

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Definitions:

Trend Analysis

The practice of collecting information and attempting to spot a pattern or trend in the data, commonly used in financial analysis, market research, and operational management.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Payout Ratios

Payout ratios indicate the proportion of earnings a company pays to its shareholders in the form of dividends, usually expressed as a percentage of net income.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings (EPS), used to evaluate if a stock is under or overvalued.