If the Marginal Propensity to Save Is Equal to 0

question 1

Multiple Choice

If the marginal propensity to save is equal to 0.5 in the simple Keynesian model,then a 10-unit increase in government spending will cause output to rise by

• A)5 units.
• B)10 units.
• C)20 units.
• D)25 units.
• E)40 units.

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Definitions:

Standard Hours Per Unit

The predetermined amount of time expected to be required to produce one unit of a product under standard operating conditions.

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Direct Labor Time Variance

The difference between the actual time taken to complete a task and the standard time expected, multiplied by the labor rate.

Factory Overhead Volume Variance

The difference between the budgeted and actual volume of production, affecting the allocation of fixed manufacturing overhead costs to products.