Suppose Aggregate Output Is Demand- Determined

question 31

Multiple Choice

Suppose aggregate output is demand- determined. Suppose a decrease in autonomous investment expenditure of $20 million reduces equilibrium national income by $50 million. The simple multiplier is equal to

• A)0.6.
• B)0.4.
• C)- 0.6.
• D)- 2.5.
• E)2.5.

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Definitions:

Production Technology

The methods, equipment, and processes used to produce goods and services, including advancements that improve efficiency and productivity.

Hourly Wage Rate

The rate of pay given to employees per hour worked, often used to calculate earnings for part-time or casual work.

Production Technology

This term refers to the methods and processes used to create goods and services, incorporating tools, machinery, techniques, and knowledge.

Labor Intensive

Describing industries or processes that require a large amount of labor to produce goods or services, often associated with higher employment but lower capital investment.