The Numerical Value of the Multiplier Will Be Smaller the

question 22

Multiple Choice

The numerical value of the multiplier will be smaller the

• A) larger the average propensity to consume.
• B) larger the slope of the saving schedule.
• C) larger the slope of the consumption schedule.
• D) smaller the slope of the saving schedule.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Theory of Constraints

A management approach that focuses on identifying and managing the most limiting factor (constraint) that stands in the way of achieving a goal.

Goldratt and Cox

Eliyahu M. Goldratt and Jeff Cox, co-authors of "The Goal," a book introducing the Theory of Constraints, a methodology for improving organizational performance.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of investments.