Consider a Model in Which Output Is Demand-Determined

question 116

Multiple Choice

Consider a model in which output is demand-determined. If the marginal propensity to spend out of national income is 0.4, then a $0.6 billion decrease in government purchases will cause equilibrium national income to
By approximately .

• A) decrease; $1.50 billion
• B) decrease; $1.00 billion
• C) decrease; $0.24 billion
• D) increase; $1.00 billion
• E) increase; $1.50 billion

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Definitions:

Inventory Costing Methods

Inventory costing methods are accounting principles used to value inventory, such as First In, First Out (FIFO), Last In, First Out (LIFO), and weighted average cost.

Production Supervisors

Individuals responsible for overseeing the production process and ensuring that manufacturing operations are carried out efficiently.

Manufacturing Overhead Applied

The allocation of manufacturing overhead costs to individual units of product based on a predetermined rate or activity base.

Direct Materials

Materials directly related and identifiable in the production of a particular item.