Suppose Aggregate Output Is Demand-Determined

question 15

Multiple Choice

Suppose aggregate output is demand-determined.Which of the following will lead to an increase in the simple multiplier?

• A)an increase in the marginal propensity to consume
• B)a decrease in the marginal propensity to consume
• C)a decrease in autonomous consumption
• D)an increase in autonomous consumption
• E)an increase in investment

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Definitions:

Debt Costs

The total expenses involved in borrowing money, including interest payments and fees.

Flotation Costs

The expenses incurred by a company in issuing new securities, including legal, accounting, and underwriting fees.

WACC

Abbreviation for Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, reflecting the cost of each type of capital (debt, equity, etc.) to the overall business.

Debt-Equity Ratio

A financial benchmark illustrating the ratio of debt to equity used in asset financing for a company.