If Real Consumption Spending Increases by $400 Billion Each Time

question 26

Multiple Choice

If real consumption spending increases by $400 billion each time real disposable income rises by $1,000 billion,the marginal propensity to consume is

• A) 40
• B) 4
• C) 0.4
• D) 0.04
• E) 0.004

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Definitions:

Accounting Cycle

The collective process of identifying, analyzing, and recording the accounting events of a company.

Post-closing Trial Balance

A trial balance prepared after closing entries are made, used to check the balance of debits and credits have been maintained throughout the period after all closing entries are completed.

Financial Statements

Comprehensively prepared records presenting the financial activities and position of a business, person, or entity.

Work Sheet

A document used by accountants to prepare adjusting entries and to draft a company's financial statements, summarizing all of the ledger account balances.