Suppose Economists Observe That an Increase in Government Purchases of $10

question 116

Multiple Choice

Suppose economists observe that an increase in government purchases of $10 billion raises aggregate expenditures by $40 billion. These economists would estimate that the marginal propensity to save is

• A) 0.25.
• B) 0.75.
• C) 4.
• D) 30.

Understand and differentiate between various liquidity ratios and their implications for a company's short-term financial health.

Apply vertical analysis to different components of financial statements and interpret the results.

Calculate and interpret inventory turnover and its impact on business operations.

Identify the components included and excluded in computing the acid-test ratio.

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Definitions:

Average Time

The mean period taken for a task or process to occur; calculated by summing the total time taken and dividing it by the number of occurrences or instances.

Customers

Individuals or entities that purchase goods or services from a business.

System

A set of interacting or interdependent components forming an integrated whole to serve a common purpose.

Average Number

The sum of values divided by the count of values, used to find the central or typical value in a set of numbers.