Because of the Multiplier, a One-Time Change in Expenditure Will

question 10

Multiple Choice

Because of the multiplier, a one-time change in expenditure will

• A) have little secondary effect on real GDP.
• B) generate more additional real GDP than the initial change in expenditure.
• C) decrease saving and investment activity and thereby decrease future real GDP.
• D) expand real GDP by an infinite amount.

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Definitions:

Sell-Offs

The rapid selling of assets such as stocks, bonds, or commodities in the financial market, often in response to market or economic indicators.

Angel Capitalism

An investment approach where affluent individuals provide capital for startup companies in exchange for ownership equity or convertible debt.

Venture Capitalism

The practice of investing in startups and small businesses with long-term growth potential in exchange for equity.

Finance

Planning, obtaining, and managing a company’s funds to accomplish its objectives as effectively and efficiently as possible.