If the Multiplier Is 3, a $750,000 Increase in Autonomous

question 82

True/False

If the multiplier is 3, a $750,000 increase in autonomous expenditure increases equilibrium expenditure by $2.25 million.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific period, showing revenue, expenses, and net income or loss.

Contribution Margin Ratio

A financial metric that shows what percentage of sales revenue is available to cover variable costs and contribute to fixed costs and profits.

Fixed Monthly Expenses

Regular expenses that do not vary in amount and occur every month, such as rent or mortgage payments.

Net Operating Income

A company's operating profit after subtracting operating expenses from revenue, excluding non-operating activities like taxes and interest.