The Positive Slope of the Consumption Function Indicates That

question 296

Multiple Choice

The positive slope of the consumption function indicates that

• A) consumers spend less out of each extra dollar of income.
• B) the amount of household wealth is subject to change.
• C) when prices fall consumers spend more.
• D) consumers increase their total consumption expenditure when disposable income increases.

Learn the methodologies for calculating net present value (NPV) in international finance, including home and foreign currency approaches.

Comprehend the impact of international trade agreements on exchange rates and trade flows.

Understand the risks associated with exchange rate fluctuations, including short-run, long-run, and translation exposure.

Learn the strategies for managing exchange rate risks, including the use of forward rates and financial remittances.

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Definitions:

Cost Pools

Groupings of individual costs based on their similarity or a shared function, used in activity-based costing to allocate costs more accurately.

ABC System

Stands for Activity-Based Costing system, a method of allocating overhead and indirect costs to specific products or services based on their consumption of resources.

Prime Cost

Direct materials plus direct labor costs.

Machine Hours

The total number of hours that machines are used or operated during a specific time period, often used as a basis for allocating manufacturing overhead.