If a Country's Imports Are Very Important in Determining the Volume

question 91

Multiple Choice

If a country's imports are very important in determining the volume of exports from its trading partners, then:

• A)the simple spending multiplier understates the true value of the multiplier.
• B)the spending multiplier will equal 1/marginal propensity to import.
• C)the simple spending multiplier is an accurate measure of the multiplier effect.
• D)the simple spending multiplier will equal 1/MPC
• E)the spending multiplier will equal 1/marginal propensity to save.

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Definitions:

Holding Cost

Holding cost is the expense associated with storing unsold goods or items held in inventory over a certain period, including warehousing, insurance, and depreciation costs.

Economies of Scale

The cost advantage achieved by an increase in production volume that leads to a reduction in per-unit costs.

Cycle Inventory

The portion of inventory available due to the batching of orders, which rotates regularly and is used to meet consumer demand between replenishments.

Lot Size

The quantity of items that are processed or purchased at one time, affecting both inventory costs and manufacturing processes.