Assume There Is No Government or Foreign Sector

question 99

Multiple Choice

Assume there is no government or foreign sector. If the multiplier is 5, a $4 billion increase in investment will cause aggregate output to increase by

• A) $125 billion.
• B) $80 billion.
• C) $50 billion.
• D) $20 billion.

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Definitions:

Unit Costs Decreasing

A situation indicating that the expense incurred to produce a single unit of output is declining, often due to efficiencies or increased production scale.

Lowest Gross Profit

The smallest amount of profit generated from selling goods or services, calculated by subtracting the cost of goods sold from sales revenue.

Raw Materials

Basic substances in their natural, modified, or unprocessed states used in the production or manufacturing of goods.

Operating Expense

The costs associated with the day-to-day operations of a business, excluding the costs of goods sold.