Which One of the Following Changes Is Consistent with a Change

question 61

Multiple Choice

Which one of the following changes is consistent with a change in an economy's consumption function from C = $500 billion + 0.80Y to C = $700 billion + 0.80Y?

• A)An increase in disposable income taxes.
• B)An increase in interest rates
• C)A decrease in permanent disposable income.
• D)An increase in wealth.
• E)An increase in savings.

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Definitions:

Absorption Costing

This approach to bookkeeping encompasses all production-associated expenses, including direct materials, direct labor, and all manufacturing overheads, both variable and fixed, in calculating the product's price.

Operations

Refers to the ongoing activities of a business involved in the production or provision of goods and services.

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and overhead) in the cost of goods sold, treating fixed costs as period expenses.

Absorption Costing

An accounting method that captures all the manufacturing costs, including both fixed and variable costs, associated with producing a specific product.