If the Simple Spending Multiplier Is 8, the Marginal Propensity

question 64

Multiple Choice

If the simple spending multiplier is 8, the marginal propensity to consume (MPC) is _____

• A) 1/8.
• B) 1/4.
• C) 4/5.
• D) 7/8.
• E) 8.

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Definitions:

Common-Size Balance Sheet

A balance sheet where each line item is expressed as a percentage of total assets, facilitating comparison across periods or companies.

Balance Sheet

A financial statement that reflects the financial position of a company at a specific point in time, detailing assets, liabilities, and owners' equity.

Vertical Analysis

A method of financial statement analysis where each entry for a given period is presented as a proportion of a fixed line item.

Total Assets

The sum of all assets owned by a company, including cash, inventory, and property.