If the MPC Equals 0.75, Then

question 428

Multiple Choice

If the MPC equals 0.75, then

• A) for every $100 increase in consumption expenditure, disposable income increases by $75.
• B) consumption expenditure is always more than disposable income.
• C) for every $100 increase in disposable income, saving increases by $75.
• D) for every $100 increase in disposable income, saving increases by $25.

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Definitions:

Journal Entry

A record of financial transactions in the accounting records, showing the accounts and amounts to be debited and credited.

Estimated

A calculated approximation or judgement made without complete information, often used in planning or forecasting.

Temporary Account

A temporary account is used to track transactions during an accounting period, which is then transferred to a permanent account at the period's end, such as revenue and expense accounts.

Bad Debts Expense

Represents the amount of receivables a company does not expect to collect and is recorded as an expense.