If the MPC = 0.80,the Tax Multiplier Is

question 31

Multiple Choice

If the MPC = 0.80,the tax multiplier is

• A) -2.
• B) -4.
• C) -5.
• D) -8.

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Definitions:

Ratios

Quantitative measures used to assess the financial performance, liquidity, efficiency, or risk of a business entity.

Current Ratio

This ratio indicates how well a business can settle its short-term debts with assets that are readily available.

Acid-test Ratio

A stringent indicator of a company’s short-term liquidity, calculated by dividing liquid assets by current liabilities, excluding inventory.

Debt-to-equity Ratio

The ratio that indicates the mix between shareholders' equity and debt in the capital structure used to finance assets.