The Marginal Propensity to Consume

question 35

Multiple Choice

The marginal propensity to consume

• A) increases when income increases.
• B) is the change in consumption associated with a change in income.
• C) is equal to consumption divided by income.
• D) decreases when income increases.

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Definitions:

Accrued Expense

Expenses that have been incurred but not yet paid for or recorded through a formal invoicing system, recognized in the period they are incurred rather than when paid.

Prepaid Expense

Expenses paid in advance by a company for services or goods to be received in the future, considered an asset on the balance sheet until used or consumed.

Ending Inventory

The last recorded value of inventory held by a business at the end of its financial reporting period.