VCW Enterprises Manufactures Small Electronics and Plans to Start Selling

question 38

Multiple Choice

VCW Enterprises manufactures small electronics and plans to start selling warranty services in the near future.VCW's financial performance will most likely increase dramatically once VCW earns at least ________ of its sales from services.

• A) 5%
• B) 20%
• C) 40%
• D) 55%
• E) 70%

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Definitions:

Business Cycle

The fluctuations in economic activity that an economy experiences over a period, typically characterized by expansion (growth) and contraction (recession) phases.

MPC

The marginal propensity to consume, which represents the portion of additional income that a household spends on consumption instead of saving.

Multiplier

In economics, a factor by which a change in one economic variable, such as spending, leads to a greater change in another variable, such as GDP.

Nondiscretionary Fiscal Policy

involves automatic stabilizers that adjust government spending and taxes without the need for new legislation, helping to moderate the business cycle.