Suppose Consumption Is $5,000 When Income Is $8,000 and the MPC

question 51

Multiple Choice

Suppose consumption is $5,000 when income is $8,000 and the MPC equals 0.9. When income increases to $10,000, consumption is

• A) $2,700.
• B) $4,500.
• C) $6,800.
• D) $7,200.

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Definitions:

Control Over Inventory

The process of managing and regulating the supply, storage, and accessibility of inventory to ensure sufficient quantities without excessive surplus.

Periodic Inventory System

The inventory system in which the inventory records do not show the amount available for sale or sold during the period.

Merchandise Inventory Account

An account that tracks the cost of goods held for sale during an accounting period.

Inventory Costing Methods

Refer to the approaches used by companies to assign costs to their inventory items and determine the cost of goods sold.