The Amount by Which Consumption Increases When After-Tax Income Increases

question 28

Multiple Choice

The amount by which consumption increases when after-tax income increases by $1 is called the:

• A) marginal propensity to consume.
• B) marginal consumption revenue.
• C) variable propensity to consume.
• D) consumption multiplier effect.

---

Definitions:

Frictional Unemployment

Short-term unemployment that arises from the process of workers moving between jobs, including fresh entrants to the labor market.

Labor Unions

Organizations formed by workers from related fields that work for the collective rights of the members, including better wages, working conditions, and benefits.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate.

Wages

Payments made to workers for their labor, typically calculated on an hourly, daily, or piecework basis.