An Initial Increase in Government Spending of $100 Billion Can

question 35

Multiple Choice

An initial increase in government spending of $100 billion can create more than $100 billion through what economists call a(n) ________ effect.

• A) multiplier
• B) enhancement
• C) interest rate
• D) aggregate supply
• E) wealth

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Definitions:

Direct Write-Off Method

A method of accounting for bad debts that charges the amount of an outstanding account directly to the expense account at the time it is deemed uncollectable.

Accounting Equation

A fundamental principle of accounting that equates assets with the sum of liabilities and shareholders' equity (Assets = Liabilities + Equity).

Partial Balance Sheet

A financial statement that shows a subset of the assets, liabilities, and equity of a company at a specific point in time.

Total Current Assets

The value of all assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business.