If a $200 Billion Increase in Investment Spending Creates $200

question 216

Multiple Choice

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the multiplier in the economy is

• A)4.
• B)5.
• C)3.33.
• D)2.5.

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Definitions:

Actuarial Present Value

A calculation used to determine the present value of a future series of payments or receipts, taking into account variables such as mortality, investment earnings, and expense risks.

Net Periodic Pension Cost

The net periodic pension cost is the total expense recognized in a period related to an employer's pension plan, including service costs, interest costs, expected returns on plan assets, and any amortizations.

Employer's Contribution

A payment made by an employer into a fund, pension plan, or insurance for the benefit of the employee.

Pension Expense

The annual cost recognized by an employer for its pension plan, which includes service costs, interest costs, expected returns on plan assets, and gains or losses.