Which of the Following Best Characterizes the Relationship Between the Marginal

question 44

Multiple Choice

Which of the following best characterizes the relationship between the marginal propensity to consume and the multiplier?  

• A) The lower the MPC, the higher the multiplier. 
• B) The higher the MPC, the lower the multiplier. 
• C) The MPC equals the multiplier. 
• D) The lower the MPC, the lower the multiplier.

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Definitions:

Profit Margin

A financial ratio that shows what percentage of sales has turned into profits, indicating the efficiency of a company's cost management.

Accounts Payable

Accounts payable are amounts a company owes its suppliers or creditors for goods or services received that have not yet been paid for.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues.