The Multiplier Effect

question 10

Multiple Choice

The multiplier effect

• A) promotes stability of the general price level.
• B) magnifies small changes in spending into larger changes in real GDP.
• C) generates instability in autonomous expenditure.
• D) increases the MPC.

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Definitions:

Total Assets

The sum of all resources owned by a company, valued according to accounting principles, including both current and non-current assets.

Current Position Analysis

A financial evaluation that assesses a company's current financial health, focusing on its ability to meet short-term obligations with its current assets.

Short-Term Creditors

Individuals or entities that have lent money to a company with the expectation that it will be repaid within a short timeframe, typically less than one year.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.