The Marginal Propensity to Consume (MPC)is

question 186

Multiple Choice

The marginal propensity to consume (MPC) is

• A) the change in consumption divided by the change in disposable income
• B) total consumption divided by total disposable income
• C) the change in disposable income divided by the change in consumption
• D) total disposable income divided by total consumption
• E) the change in disposable income minus the change in consumption

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Definitions:

Direct Write-off Method

An accounting method where bad debts are charged against income at the time they are determined to be uncollectible, rather than being estimated and accounted for in advance.

Allowance for Doubtful Accounts

An estimation of the amount of credit sales that are expected not to be collected, representing a reserve for potential bad debts.

Notes Receivable

Legally enforceable claims for money owed to a business by its customers or clients, typically evidenced by a written promise to pay.

Formal Instruments of Credit

Legal documents that acknowledge debt and specify terms of repayment, such as notes payable or bonds.