If the marginal propensity to consume was 0.75, it would mean that:
A. $0.25 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 spent on consumption.
C. $0.75 of an additional $1 of individuals' after-tax income is saved.
D. None of these is true.
Answer: B
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In the United States for the last 40 years, the nominal interest rate
A) and the real interest rate both decreased in almost every year. B) and the real interest rate were both constant in almost every year. C) was constant in most years and the real interest rate fluctuated. D) exceeded the real interest rate in virtually all the years. E) exceeded the real interest rate in about one half of the years and the real interest rate was greater than the nominal interest rate in the other half of the years.
Demand for goods in broader category definitions, such as "beverages", is usually less elastic than demand for more narrowly defined goods, such as "diet colas."
a. True b. False