Scenario 10.2 A Hypothetical Open Economy Has a Marginal Propensity to Import

question 90

Multiple Choice

Scenario 10.2
A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7. Assume that the economy is initially in equilibrium.
-Refer to Scenario 10.2. What is the marginal propensity to save of this economy?

• A) 0.2
• B) 0.3
• C) 0.7
• D) 0.9
• E) 0.6

Understand the application and limitations of the high-low method in cost estimation.

Learn about the significance of the least-squares regression method and its statistical reliability in cost estimation.

Know the structure of the contribution margin income statement and its use in classifying costs by behavior.

Understand the principles of activity-based costing (ABC) and its application in internal decision-making.

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Definitions:

Psychological Contract

The unwritten, implicit set of expectations and obligations between an employer and an employee regarding the terms of their working relationship.

Withdrawal

An action or set of actions employees take to distance themselves from their job, such as absenteeism, quitting, or seeking transfers, often due to dissatisfaction.

Destructive Stress

Excessive stress that negatively impacts an individual's mental or physical health, potentially leading to burnout or other health issues.

Reduced Performance

This refers to a situation where output or efficiency is below expected or previously achieved levels.