If the Marginal Propensity to Save (MPS) Is 0

question 55

Multiple Choice

If the marginal propensity to save (MPS) is 0.10, the value of the spending multiplier is:

• A) 1.
• B) 9.
• C) 10.
• D) 90.

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Definitions:

Estimated Annual Costs

A forecast of the total costs a company expects to incur over a year, including fixed and variable expenses.

Expected Annual Activity

The anticipated level of operations or production for a business during a one-year period.

Predetermined Overhead Rate

A rate used to assign manufacturing overhead costs to products or job orders, calculated based on estimated overhead costs and an allocation base.

Direct Labor Cost

The total cost of work done by employees who are directly involved in the manufacturing of a product.