If the Marginal Propensity to Consume Was 0

question 80

Multiple Choice

If the marginal propensity to consume was 0.75, it would mean that:

• A) $0.75 of an additional $1 of individuals' after-tax income is spent on consumption.
• B) $0.75 of an additional $1 of individuals' after-tax income is saved.
• C) $0.25 of an additional $1 of individuals' after-tax income is spent on consumption.
• D) None of these is true.

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Definitions:

Accounting Profit

The total revenue of a business minus the explicit costs, representing the financial gain shown in the income statement.

Implicit Costs

The opportunity costs that arise from using assets, resources, or funds to undertake an action instead of another activity, not directly recorded in financial statements.

Explicit Costs

Direct monetary expenses incurred in the course of doing business, such as wages, rent, and materials.

Peak Efficiency

The optimal point at which a particular process or system operates with maximum effectiveness or efficiency.