Which Statement About the Multiplier Is Correct

question 71

Multiple Choice

Which statement about the multiplier is correct?

• A)If a $20 billion increase in spending creates $20 billion of new income in the first round of the multiplier process and $15 billion in the second round, the multiplier in the economy is 5.
• B)If a $40 billion increase in spending creates $40 billion of new income in the first round of the multiplier process and $20 billion in the second round, the multiplier in the economy is 4.
• C)If a $60 billion increase in spending creates $60 billion of new income in the first round of the multiplier process and $50 billion in the second round, the multiplier in the economy is 5.
• D)If an $80 billion increase in spending creates $80 billion of new income in the first round of the multiplier process and $60 billion in the second round, the multiplier in the economy is 4.

---

Definitions:

Hospitalize

The act of admitting someone into a hospital for medical treatment, observation, or care.

Mentally Ill

Pertains to persons experiencing mental health conditions that impact their emotions, thought processes, and actions.

Indefinite Period

A span of time with no specified end; often used in contexts where durations are uncertain or open-ended.