When Households' Marginal Propensity to Consume (MPC) Increases, the Size

question 184

Multiple Choice

When households' marginal propensity to consume (MPC) increases, the size of the spending multiplier:

• A) also increases.
• B) decreases.
• C) remains unchanged.
• D) reacts unpredictably.

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Definitions:

Other Expenses

Costs not directly related to the production of goods or services, including administrative and general expenses.

Planning Budget

A forecast that outlines future income, expenses, and financial goals, guiding financial decision-making over a specific period.

Fixed Cost

Fixed cost refers to business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, or insurance, integral to budgeting and planning.

Total Expenses

The sum of all costs and expenses, both fixed and variable, incurred by a business during a specific period.