The Practical Significance of the Multiplier Is That It

question 87

Multiple Choice

The practical significance of the multiplier is that it:

• A)brings about an equality of planned investment and saving.
• B)magnifies relatively small initial changes in spending into larger changes in GDP.
• C)keeps inflation within tolerable limits.
• D)helps to stabilize the economy.

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Definitions:

Adjusting Entry

An accounting journal entry made at the end of an accounting period to record any unrecognized income or expenses for the period.

Unexpired Amounts

Refers to the portion of an expense that has not yet been consumed or used up during the accounting period, often related to prepaid expenses or insurance premiums.

Insurance Expense

The cost incurred by a company to obtain insurance coverage for its operations, assets, or liabilities.

Prepaid Insurance

Prepaid insurance is an asset account representing insurance premiums that have been paid in advance and have not yet expired at the time of a balance sheet report.