The Average Propensity to Consume Is

question 181

Multiple Choice

The average propensity to consume is

• A) always stable.
• B) equal to consumption divided by income.
• C) equal to income divided by consumption.
• D) the increase in consumption derived from an increase in income.

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Definitions:

Direct Materials

Raw materials that are directly incorporated into a finished product and can be easily traced to it.

Direct Labor

The labor costs of employees who are directly involved in the production of goods or services.

Manufacturing Overhead

Indirect production expenses including costs for factory equipment depreciation, quality control, and facility rent that are not directly linked to individual products.

Cost of Goods Manufactured

The total cost incurred to produce goods that are completed within a specific accounting period.