Refer to the Given Table, Which Illustrates the Multiplier Process

question 77

Multiple Choice

$$\begin{array} { | l | c | c | c | } \hline & \text { Change in Income } & \begin{array} { c } \text { Change in } \\\text { Consumption }\end{array} & \text { Change in Saving } \\\hline \text { Assumed Increase in Investment } & \$ 20 & \$ & \$ 4.00 \\\hline \text { Second Round } & \$ & \$ 12.80 & \$ \\\hline \text { All Other Rounds } & \$ & \$ 51.20 & \$ \\\hline \text { Totals } & \$ & \$ & \$ 20.00 \\\hline\end{array}$$ Refer to the given table, which illustrates the multiplier process. The marginal propensity to save is

• A) 0.5.
• B) 0.25.
• C) 0.2.
• D) 0.1.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs — direct materials, direct labor, and both variable and fixed manufacturing overhead — in the cost of a product.

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Absorption Costing

An accounting method that includes all manufacturing costs – direct materials, direct labor, and both variable and fixed manufacturing overhead – in the cost of a product.

Variable Costing

An accounting method that includes only variable costs—costs that vary with production level—in the calculation of unit cost.