The Total Change in Aggregate Spending Generated by Increased Government

question 104

Multiple Choice

The total change in aggregate spending generated by increased government spending depends on the

• A)Marginal propensity to consume.
• B)Size of the recessionary GDP gap.
• C)AD shortfall.
• D)AD excess.

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Definitions:

Corporate Bonds

Debt issued by corporations and exposed to default risk. Different corporate bonds have different levels of default risk, depending on the issuing company’s characteristics and on the terms of the specific bond.

Return on Invested Capital (ROIC)

A profitability ratio that measures the return that an investment generates for those who have provided capital, either debt or equity.

Net Operating Profit After Taxes (NOPAT)

NOPAT is a measure of a company's operating efficiency, indicating the profit generated from operations after taxes but before financing costs and non-operating gains and losses.

Shareholders' Equity

The owners' equity in a corporation, calculated as the company's total assets minus its total liabilities.