If Autonomous Consumption Increases, the Size of the Multiplier Would

question 142

Multiple Choice

If autonomous consumption increases, the size of the multiplier would:

• A) decrease.
• B) remain constant.
• C) increase.
• D) either increase or decrease depending on the size of the change in autonomous consumption.

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Definitions:

Absorption Costing

A method of cost accounting that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of a product.

Cost Per Unit

The complete cost associated with manufacturing, storing, and selling a single unit of a product or service.

Finished Goods

Inventory items that have completed the manufacturing process and are ready for sale to customers.

Variable Costing

A costing method that includes only variable costs—costs that change with production levels—in the calculation of unit costs.