A Reduction in the Marginal Propensity to Import Will Cause

question 49

Multiple Choice

A reduction in the marginal propensity to import will cause

• A)the ZZ line to become flatter and a given change in government spending (G)to have a larger effect on domestic output.
• B)the ZZ line to become flatter and a given change in government spending (G)to have a smaller effect on domestic output.
• C)the ZZ line to become steeper and a given change in government spending (G)to have a larger effect on domestic output.
• D)the ZZ line to become steeper and a given change in government spending (G)to have a smaller effect on domestic output.

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Definitions:

Invoice Date

The date on which an invoice is issued, marking the point in time when the billing process for goods delivered or services rendered begins.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a reversal of sales revenue.

Allowances Account

An account used to offset the gross accounts receivable balance for the estimated amount of uncollectible accounts.

Credit Sale

A transaction where the goods or services are provided to the customer with payment to be made at a later date.