If the Consumption Function Is Given by C = 150

question 15

Multiple Choice

If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then C increases by:

• A)0.15 units.
• B)0.5 units.
• C)0.85 units.
• D)1 unit.

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Definitions:

Prepaid Rent

Payments made in advance for rent that is recorded as an asset on the balance sheet until it is expensed over time as it is used.

Rent Expense

The cost incurred for using a property or equipment that is not owned by the company, typically charged on a periodic basis.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Supplies Used

The cost of materials and supplies consumed during an accounting period in the course of operations.