The Following Information Is for a Closed Economy: Refer

question 86

Multiple Choice

The following information is for a closed economy: Refer to the above information.The addition of a $100 billion lump-sum tax:

• A)reduces the MPC and increases the multiplier.
• B)increases the MPC and decreases the multiplier.
• C)increases both the MPC and the multiplier.
• D)has no effect on either the MPC or the multiplier.

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Definitions:

Common Fixed Expenses

Common fixed expenses are costs that remain constant in total regardless of changes in the level of activity or volume, such as rent and salaries, shared across departments or projects.

Net Operating Income

Represents the profit a company generates from its regular business operations, excluding expenses and revenues from non-operating activities.

Salaried Estimator

A professional responsible for assessing project costs, often receiving a fixed regular payment regardless of hours worked.

Absorption Costing

Absorption costing is a financial approach that integrates all production expenses, including direct materials, direct labor, and all overhead costs, both variable and fixed, into the product's cost.