Which of the following correctly defines the average propensity to consume (APC)?
A) change in planned consumption divided by change in real disposable income
B) planned consumption divided by real disposable income
C) real disposable income divided by planned consumption
D) change in real disposable income divided by change in planned consumption
Answer: B) planned consumption divided by real disposable income
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Congress created the Federal Deposit Insurance Corporation to
a. sell insurance to individuals who have bank accounts b. inject reserves into the economy more quickly c. develop a better working relationship between bank managers and government officials d. charge higher interest rates to banks e. reimburse those who lose their bank deposits
Some countries have had high inflation for a long time. Others have had low or moderate inflation for a long time. Which of the following, at least in theory, could explain why some countries would continue to have high inflation?
a. High inflation countries have relatively small sacrifice ratios and so see no need to reduce inflation. b. Inflation reduction works best when it is unexpected, and people in high inflation countries would quickly anticipate any change in monetary policy. c. In a country where inflation has been high for a long time, people are likely to have found ways to limit the costs. d. In a country where inflation has been high for a long time, there are no costs to the inflation.