Refer to the Above Diagram

question 31

Multiple Choice

Refer to the above diagram.The sizes of the multipliers associated with changes in investment and government spending in this economy:

• A)are 2.5 and 1.5 respectively.
• B)are 3 and 2 respectively.
• C)are both 2.5.
• D)are 2 and 3 respectively.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, giving them partial ownership of the company.

Corporation

A legal entity formed under state or federal statutes that is distinct from its owners (shareholders), providing limited liability protection, ease of transferability of shares, and potential tax benefits.

Legal Entity

An individual or organization with legal rights and obligations, including the ability to enter into contracts, sue, and be sued.

Cumulative Preferred Stock

A type of preferred stock that has a provision that requires the company to pay all dividends, including those that have been skipped, before any dividends can be distributed to common stockholders.