In the Standard 45-Degree Line Expenditure Model, the C

question 164

Multiple Choice

In the standard 45-degree line expenditure model, the C + I line and the C line are parallel because,

• A)all I is assumed to be autonomous.
• B)all I is assumed to be induced.
• C)consumption depends on disposable income.
• D)I rises with GDP at the same rate as C.

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Definitions:

Ending Inventory

Merchandise value ready to be sold at the close of an accounting cycle.

Retained Earnings

The portion of net earnings not distributed as dividends, but retained by the company to be reinvested in its core business or to pay debt.

Accounting Principle

Guidelines and rules that govern the accounting practices and procedures.

Financial Statement Presentation

The manner in which a company's financial data is organized and displayed in its financial statements.