Use the Following Situation to Answer the Question : Situation

question 122

Multiple Choice

Use the following Situation to answer the question : situation 20-1
Assume a closed economy with no government. Suppose that autonomous consumption equals $400, planned investment equals $500, and the mpc equals 0.9.
-Using the information contained in Situation 20-1,if planned investment decreases by $100,the equilibrium aggregate output will change by

• A)-$1,000.
• B)$-100.
• C)$100.
• D)$1,000.

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Definitions:

Conversion Costs

The combined costs of direct labor and overhead expenses incurred to convert raw materials into finished goods.

Materials

The raw substances or components that a company uses in the production of goods or delivery of services.

Conversion Costs

The costs required to convert raw materials into finished products, including labor and manufacturing overhead.

Equivalent Units

A concept used in cost accounting to express the amount of goods produced in terms of complete units.