The graph above shows the relationship between consumption and income. Which of the following statements is correct?
A. The marginal propensity to consume in the economy shown is greater than 1
B. The marginal propensity to consume varies across income levels
C. The average propensity to consume at income level K is given by KM divided by KN
D. The marginal propensity to consume can be calculated by dividing LM by 0K
C. The average propensity to consume at income level K is given by KM divided by KN
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Use the economic way of thinking to complete the following statement: An entrepreneur who owns his own building
A) enjoys the building as a free good. B) sacrifices rental income he could have been earned on the building. C) enjoys lower costs than other entrepreneurs who choose to rent buildings from others. D) enjoys larger economic profits compared to other entrepreneurs who choose to rent buildings from others.
How does rapid price adjustment, as assumed in classical models, result in separation of real from nominal variables (the classical dichotomy)?
What will be an ideal response?