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If the Marginal Propensity to Consume Is 0

question 11

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If the marginal propensity to consume is 0.75, a $40 billion decrease in government purchases, all other things constant, would:


Definitions:

Net Operating Income

The profit generated from a company's everyday business operations, indicating how much revenue exceeds both operating costs and overhead.

Residual Income

The income that remains after deducting all required expenses and cost of capital from operating income.

Investment Centers

Segments within a company for which managers have responsibility over cost, revenue, and investment decisions.

Cost Center

A business segment whose manager has control over cost but has no control over revenue or investments in operating assets.

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