Question

Evaluate the following statement. A family with an $120,000 annual income can purchase twice the amount...

Evaluate the following statement.

A family with an $120,000 annual income can purchase twice the amount of goods and services as a $40,000 family.

True

False

True or False: Annual money income is not always a good measure of economic status.

True

False

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Homework Answers

Answer #1

1) The given statement is 'False'

This is because , the amount that is spent depends of Marginal Propensity to Consume where according to MPC , one can spend more than double or less than double for a $40,000

Therefore 'False' is the answer to this question

The given statement is True and this is because even a person having less annual income can have more assets even with less income and this may trigger wrong results.

Therefore 'False' is the answer to this question

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