Here Is a Consumption Function: C = C₀ + MPC(Y_d)

question 66

Multiple Choice

Here is a consumption function: C = C₀ + MPC(Y_d) .If C₀ = $4,000,then we know that

• A) if Y_d rises by $1,then Co rises by $1.
• B) if Y_d rises by $1,then C rises by $4,000.
• C) as C₀ rises by $150,C rises by $150.
• D) as C₀ rises by $150,Y_d rises by $150.

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Definitions:

Internal Control

Processes adopted by organizations to ensure accuracy and integrity in financial reporting, operational efficiency, and compliance with laws and regulations.

Financial Statements

Formal records that outline the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Inventory Costing Methods

Strategies used by companies to assign costs to inventory and to determine the cost of goods sold, including FIFO (First In, First Out), LIFO (Last In, First Out), and weighted average cost.

LIFO Method

An inventory valuation method that assumes the last items of inventory purchased are the first ones sold, potentially minimizing taxes in an inflationary period.