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If the Marginal Propensity to Consume Is 4/5, Then a Decrease

question 139

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If the marginal propensity to consume is 4/5, then a decrease in government spending of $1 billion decreases the demand for goods and services by $5 billion.


Definitions:

Margin of Safety Percentage

A financial metric indicating the difference between actual sales and break-even sales, expressed as a percentage of actual sales.

Break-even Point

The point at which total costs equal total revenue, meaning there is no profit and no loss.

Sales Dollars

The total monetary amount of sales transactions made within a particular period.

Break-even Point

The point at which total costs and total revenue are equal, meaning no profit is made but losses are recovered.

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