In Econland Autonomous Consumption Equals 700, the Marginal Propensity to Consume

question 113

Multiple Choice

In Econland autonomous consumption equals 700, the marginal propensity to consume equals 0.80, net taxes are fixed at 50, planned investment is fixed at 100, government purchases are fixed at 100, and net exports are fixed at 40. Induced expenditure equals:

• A)0.20Y.
• B)990 + 0.20Y.
• C)0.80Y.
• D)900 + 0.80Y.

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Definitions:

Straight-Line

A method of allocating the cost of a tangible asset over its useful life in equal yearly amounts.

Carrying Amount

The value at which an asset is recognized in the balance sheet after deducting accumulated depreciation and impairment losses.

Residual Value

The estimated value that an asset will realize upon its disposal at the end of its useful life.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use.