Scenario 34-2

question 89

Multiple Choice

Scenario 34-2.The following facts apply to a small,imaginary economy.
• Consumption spending is $6,720 when income is $8,000.
• Consumption spending is $7,040 when income is $8,500.
-Refer to Scenario 34-2.The marginal propensity to consume for this economy is

• A)0.64.
• B)0.83.
• C)0.56.
• D)0.840.

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Definitions:

Cost Of Goods Sold

The total cost of materials and labor directly associated with the production of goods sold by a business.

Direct Costs

Direct costs are expenses directly associated with the production of goods or services, such as materials and labor.

Global Capital Market

The worldwide financial markets in which money flows for the purpose of investment and financing across different countries.

Volatile Exchange Rates

Exchange rates that fluctuate widely in a short period of time, affecting the value of currencies traded on the foreign exchange market.