Suppose the Price Level Is Constant, Output Is Demand- Determined

question 97

Multiple Choice

Suppose the price level is constant, output is demand- determined, and the economy is closed with no government. If the saving function is S = - 100 + (0.4) Y, the simple multiplier is

• A)0.2.
• B)1.
• C)2.5.
• D)5.
• E)- insufficient information to know.

---

Definitions:

Operating Activities

These involve the primary, day-to-day actions that generate revenue for a company, such as selling products or services.

Direct Method

A method in financial accounting that formats cash flow statements by listing major operating cash receipts and payments, used to provide a clearer view of cash from operating activities.

Fully Depreciated Equipment

An asset that has reached the end of its useful life for accounting purposes, having its cost fully allocated to depreciation expense.

Statement of Cash Flows

A finance report summarizing every cash inflow from ongoing business operations and external investments, and all cash outflows for corporate activities and investment purposes, within a set period.