Generally,as Income Rises,the Average Propensity to Consume

question 57

Multiple Choice

Generally,as income rises,the average propensity to consume

• A)stabilizes.
• B)drops to zero.
• C)increases.
• D)becomes erratic.
• E)decreases.

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Definitions:

Collection Time

The average period it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Money Market Securities

Short-term financial instruments that are typically liquid and considered safe, such as Treasury bills and certificates of deposit.

Average Daily Float

The average amount of un-cleared or in-process checks and electronic payments that are recorded in a company’s accounting system at any given time.

Collection Delay

The time it takes for a business to receive payment after issuing an invoice or credit sale, impacting cash flow.