Questions 19 through 21 use the following information about a particular household.
In 2022, disposable income is 80,000 and consumption is 70,000. In 2023, disposable income is
95,000 and consumption is 80,500. Neither autonomous consumption nor the marginal
propensity to consume change in 2022 or 2023.
19. The marginal propensity to consume is
(a) 0.7 (b) 0.8
(c) 0.825 (d) 0.875
20. For what level of disposable income would saving be zero in this case?
(a) 20,000 (b) 42,000
(c) 46,667 (d) 48,333
21. Suppose that the household’s net worth on January 1, 2022 is 150,000. Suppose that the
household’s disposable income is 104,000 in 2024. What will the household’s net worth be on
January 1, 2025?
(a) 167,200 (b) 181,200
(c) 191,700 (d) 205,700