If the Marginal Propensity to Consume (MPC) Is 0

question 89

Multiple Choice

If the marginal propensity to consume (MPC) is 0.80, the value of the spending multiplier is:

• A) 2.
• B) 5.
• C) 8.
• D) 10.

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Definitions:

Second-stage Allocation

In cost accounting, this is the process of allocating service department costs to producing departments based on relevant measures.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific products or projects based on their use of activities, leading to more accurate product costing.

Profitable Products

Products that generate more revenue than the costs involved in their creation, marketing, and distribution.

Time-based Activity-based Costing

An approach that combines the principles of activity-based costing with a focus on how much time activities consume, improving the accuracy of cost allocation.