Suppose Aggregate Output Is Demand-Determined

question 104

Multiple Choice

Suppose aggregate output is demand-determined.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $8 billion,the marginal propensity to spend must be

• A)2/5.
• B)1/2.
• C)2/3.
• D)4/5.
• E)2.

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Definitions:

Accounts Receivable

Accounts receivable are the amounts owed to a company by its customers for goods or services delivered but not yet paid for.

Net Sales

Revenue from sales transactions after deducting returns, allowances for damaged or missing goods, and discounts.

Working Capital Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets, indicating liquidity.

Current Liabilities

Short-term financial obligations due within one year or within a company's operating cycle, whichever is longer.