Everything Else Held Constant,if Total Consumption Increases from $600 to $800

question 97

Multiple Choice

Everything else held constant,if total consumption increases from $600 to $800 because of an increase of disposable income of $400,then the mpc is equal to

• A)0.2.
• B)0.4.
• C)0.5.
• D)0.6.

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Definitions:

Inventory Conversion Period

The average length of time to convert materials into finished goods and then to sell them; calculated by dividing total inventory by sales per day.

Operating Cycle

The Operating Cycle is the period of time it takes for a business to purchase inventory, sell products, and convert the sales into cash, reflecting the efficiency with which a company manages its core operations.

Cash

Money in the form of coins or banknotes, especially that issued by a government.

Accruals

Accounting adjustments for revenues that have been earned but not yet recorded, and expenses that have been incurred but not yet recorded.