If the Multiplier Equals 2 and the AD Shortfall Is

question 47

Multiple Choice

If the multiplier equals 2 and the AD shortfall is $6 million,the desired fiscal stimulus is

• A)$6 million.
• B)$12 million.
• C)$333,333.
• D)$3 million.

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Definitions:

Return on Assets

A financial ratio that indicates the profitability of a company relative to its total assets.

Return on Debt

A measure of a company's profitability relative to its total debt, indicating how effectively a company is using its borrowed funds.

Cost of Equity

The return that investors expect on their investment in a company, often calculated using models like the Capital Asset Pricing Model (CAPM).