The Size of the Spending Multiplier Increases From

question 35

Multiple Choice

The size of the spending multiplier increases from:

• A) an increased response of consumption to a change in income.
• B) a decreased response of consumption to a change in income.
• C) an increase in the income tax rate on marginal income.
• D) an increase in consumer purchases of imports to a change in income.

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Definitions:

Defective Merchandise

Products that are found to have flaws or faults which impair their functionality, appearance, or intended use.

Periodic Inventory System

An inventory system that updates inventory and cost of goods sold records at the end of an accounting period.

Gross Method

An accounting practice for recording inventory purchases without deducting any purchase discounts, which are recorded only if they are actually taken.

Terms 2/10, N/60

A trade credit term where a buyer can deduct 2% from the invoice amount if payment is made within 10 days; otherwise, the full invoice amount is due in 60 days.