Consider the Simple Macro with Demand-Determined Output

question 92

Multiple Choice

Consider the simple macro with demand-determined output.If the marginal propensity to consume out of disposable income (MPC) is equal to the marginal propensity to spend out of national income (z) ,then

• A)the marginal propensity to import (m)is larger than the tax rate (t).
• B)the marginal propensity to import (m)is smaller than the tax rate (t).
• C)the simple multiplier is smaller in a closed economy with no government.
• D)the simple multiplier is larger in a closed economy with no government.
• E)there is no effect on the simple multiplier from imports or tax rates.

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor, such as utilities, rent, and salaries for managers.

Direct Labor

The labor costs directly traceable to the production of goods, including wages of workers on the production line.

Factory Overhead

All manufacturing costs that are not directly related to the production of goods, including costs associated with operating the factory.

Overhead Costs

Fixed and variable costs incurred in the operation of a business that do not directly contribute to the production of goods or services.