If the Marginal Propensity to Save Is 0

question 20

Multiple Choice

If the marginal propensity to save is 0.6,a $1.2 billion increase in intended investment will increase equilibrium GDP by ________ billion.

• A) $0.4
• B) $0.6
• C) $1.2
• D) $1.67
• E) $2

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Definitions:

Direct Labour Hour

Direct labour hour is a measure of the amount of time workers spend on direct production activities, directly involved in manufacturing goods or providing services.

Manufacturing Overhead

Manufacturing expenses not directly linked to individual product units, encompassing indirect materials and labor.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to products based on a specific activity base, like machine hours or labor hours.

Direct Labour-Hours

The total man-hours expended by workers directly involved in the manufacturing process.