If the Marginal Propensity to Consume Is 0

question 460

Multiple Choice

If the marginal propensity to consume is 0.8 and there no income taxes or imports, the multiplier for a change in autonomous expenditure equals

• A) 5.0.
• B) 0.8.
• C) 1.0
• D) 4.0.

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Definitions:

Bankruptcy

A legal proceeding involving a person or business that is unable to repay outstanding debts, resulting in the distribution of assets to creditors and discharge of debts.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's receivables that may ultimately not be collected.

Net Realizable Value

The estimated selling price of goods, minus the costs of their sale or disposal.

Write Off

The process of recognizing that a portion of a company's assets has become worthless and expensing them to the income statement.