If the Marginal Propensity to Consume Is 0

question 90

Multiple Choice

If the marginal propensity to consume is 0.1, then the tax multiplier is:

• A)exactly 0.1.
• B)more than 10.
• C)less than 10.
• D)exactly 10.

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Definitions:

Accounting System

A systematic arrangement of both manual and automated accounting processes, techniques, and safeguards designed to collect, document, categorize, scrutinize, condense, elucidate, and convey precise and up-to-date financial information.

Supplies Account

An account that tracks the cost of supplies on hand and consumed by a business, which can be adjusted through adjusting entries for accurate financial reporting.

Adjusting Entry

An accounting entry made at the end of an accounting period to allocate income and expenditure to the correct period.

Prepayment Accounts

Accounts used to record expenses that have been paid in advance and are recognized incrementally as expenses over time.