In an Open Economy, the Multiplier Is 1 Divided By

question 104

Multiple Choice

In an open economy, the multiplier is 1 divided by:

• A)MPS + MPM.
• B)MPS.
• C)MPM.
• D)MPC.

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Definitions:

Working Capital Financing Policies

Strategies that manage the short-term assets and liabilities to ensure a company has adequate funds to meet its operational needs.

Permanent Working Capital

The minimum amount of investment in current assets that a company needs to sustain its business operations.

Short-Term Debt

Describes obligations and loans that are due to be paid back within a year.

Working Capital

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