Suppose Business Confidence Rises Causing an Increase in Investment

question 41

Multiple Choice

Suppose business confidence rises causing an increase in investment. From the goods market model we know with certainty that an increase in investment will cause:

• A) a decrease in the multiplier.
• B) an increase in output.
• C) an increase in the propensity to save.
• D) a decrease in the propensity to save.
• E) an increase in the multiplier.

---

Definitions:

Marginal Revenue Curve

A graphical representation showing the additional revenue a firm can earn by selling one more unit of a good or service.

Marginal Profit

The additional profit earned from selling one more unit of a product or service.

Marginal Revenue

The incremental profit made from the sale of an additional unit of a good or service.

Marginal Cost

The increment in overall expenses due to the output of one more unit of a product or service.