A $30 Billion Increase in Government Spending Increases Real GDP

question 42

Multiple Choice

A $30 billion increase in government spending increases Real GDP by $150 billion. Assuming a constant price level,what does the government spending multiplier equal?

• A) 0.20
• B) 120
• C) 5
• D) 180

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Definitions:

Journal Entry

A documentation of a financial transaction in which the total debits equal the total credits and is entered into the accounting records.

Times Interest Earned Ratio

A financial ratio that compares a company's operating income to its interest expenses, indicating how well it can cover interest payments with earnings before interest and taxes.

Interpret

To explain or understand the meaning of something, often involving analysis or putting data into context.