Suppose the Price Level Is Constant,output Is Demand-Determined,and the Economy

question 89

Multiple Choice

Suppose the price level is constant,output is demand-determined,and the economy is closed with no government.If the marginal propensity to spend is 0.7,the simple multiplier is

• A)0.33.
• B)0.70.
• C)1.00.
• D)1.42.
• E)3.33.

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Definitions:

Revenue Recognition Principle

A fundamental accounting principle that dictates when revenue should be recognized in the financial statements, typically when it is earned and realizable.

Prepaid Expenses

Funds disbursed before receiving goods or services, documented as assets until they are utilized or consumed.

Expense Recognition Principle

An accounting principle that matches expenses with revenues in the period in which they're incurred to produce those revenues.

Service

The action of helping or doing work for someone, often refers to non-tangible products offered by businesses.