The Expenditure Multiplier Is Used to Calculate the Change in

question 14

Multiple Choice

The expenditure multiplier is used to calculate the change in

• A)spending caused by a change in income
• B)equilibrium income caused by a change in autonomous spending
• C)intended spending caused by a change in consumption
• D)disposable income caused by a change in saving
• E)government expenditures caused by a change in income

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Definitions:

Initial Outflow

The initial cash expenditure required to undertake an investment or project.

Average Accounting Return

A measure of investment profitability calculated as the average annual net earnings of a project divided by the average investment in the project.

Straight-Line Method

An accounting method for allocating the cost of an asset evenly over its useful life.

Cost of Capital

The obligatory profit percentage a corporation needs to achieve on its investments to keep its market share and attract investors.