Suppose When Disposable Personal Income Increases from $10,000 to $15,000

question 219

Multiple Choice

Suppose when disposable personal income increases from $10,000 to $15,000, consumption increases from $9,000 to $13,000. What is the marginal propensity to save?

• A) 0.2
• B) 0.4
• C) 0.6
• D) 0.8

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Definitions:

Indirect Product Costs

Costs that are not directly traceable to a specific product but are necessary for the production process, such as utilities or managerial salaries.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a set activity measure.

Raw Materials

Basic materials that are used in the production process to manufacture finished goods.

Finished Goods

Finished goods awaiting sale and not yet delivered to end-users.