Suppose an Increase in Planned Investment of $70 Billion Causes

question 126

Multiple Choice

Suppose an increase in planned investment of $70 billion causes equilibrium output demanded to rise by $280 billion.What is the value of the marginal propensity to consume?  

• A) 1/4 
• B) 1/3 
• C) 3/4 
• D) 4/3

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Definitions:

Posting

The process of recording financial transactions in the ledger from the journal in accounting.

Journalized Transactions

The formal recording of financial transactions in the accounting journals as part of the double-entry bookkeeping system.

Ledger Accounts

Records within a ledger that show the transaction history and current balance of each account.

Owner's Drawings Account

An account that tracks the amount of money a business owner withdraws from the company for personal use.