If the MPC Is 5/6 Then the Multiplier Is

question 74

Multiple Choice

If the MPC is 5/6 then the multiplier is

• A)6/5,so a $200 increase in government spending increases aggregate demand by $240.
• B)5,so a $200 increase in government spending increases aggregate supply by $1000.
• C)6,so a $200 increase in government spending increases aggregate demand by $1200.
• D)6/5,so a $200 increase in government spending increases aggregate supply by $1200.

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Definitions:

Manufacturing Overhead Costs

Indirect costs associated with manufacturing that cannot be directly traced to specific products, such as factory rent, utilities, and maintenance.

Overapplied Overhead

A credit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost applied to Work in Process exceeds the amount of overhead cost actually incurred during a period.

Product-Level Activity

Activities and costs incurred for a particular product line, not directly related to individual units but necessary for the production of the product.

Cafeteria Facilities

On-site food service areas provided by institutions for their employees, students, or residents.