If a $1,000 Increase in Income Leads to an $800

question 77

Multiple Choice

If a $1,000 increase in income leads to an $800 increase in consumption expenditures,then the marginal propensity to consume is

• A)0.2 and the multiplier is 1.25.
• B)0.8 and the multiplier is 5.
• C)0.2 and the multiplier is 1.25
• D)0.8 and the multiplier is 8.

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Definitions:

Total Manufacturing Costs

Sum of all costs directly involved in the manufacturing of a product, including raw materials, labor, and overhead expenses.

Direct Materials Used

The raw materials directly traced to the manufacturing of a product and included in its cost.

Actual Overhead

The actual incurred costs associated with running a production or operation, excluding direct materials and direct labor.

Cost of Goods Sold

Costs directly related to the manufacturing of goods a company sells, which cover materials and workforce expenses.