The Simple Multiplier Applies to Short-Run Situations in Which the Price

question 94

Multiple Choice

The simple multiplier applies to short-run situations in which the price level is constant.The simple multiplier can be defined as

• A)national income divided by aggregate expenditure.
• B)the change in equilibrium national income divided by the initial change in autonomous expenditure that brought it about.
• C)the change in national income resulting from a change in expenditure,multiplied by the number of years since the initial change.
• D)a change in aggregate expenditures multiplied by the equilibrium level of national income.
• E)the change in national income resulting from a change in saving.

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Definitions:

Impairment Losses

Monetary losses identified when the book value of an asset is higher than its salvageable value.

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties.

Accelerated Depreciation

A depreciation method that allows a larger depreciation deduction in the early years of an asset's life and smaller deductions in the later years.