If the MPS = 0

question 34

Multiple Choice

If the MPS = 0.33,a $100 increase in net exports will

• A)reduce national income by $100.
• B)reduce national income by $300.
• C)increase national income by $33.
• D)increase national income by $300.

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Definitions:

Capacity

The maximum level of output that a company can sustain to produce in a given period under normal conditions.

Predetermined Overhead Rate

A predetermined rate for distributing overhead expenses to products or services, based on anticipated costs and levels of activity.

Machine-Hours

A measure of production output or activity level based on the number of hours machines are operated.

Unused Capacity

The portion of a company’s resources or capabilities that are not currently utilized or producing income.