If the Multiplier Is 4

question 162

Multiple Choice

If the multiplier is 4.0 and investment decreases by $2.5 billion, the AD curve

• A) shifts rightward by $10 billion.
• B) shifts rightward by less than $10 billion.
• C) shifts leftward by $10 billion.
• D) shifts leftward by more than $30 billion.

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Definitions:

Permanent Working Capital

The minimum amount of working capital that a company needs to operate continuously.

Long-Term Debt

Borrowings by a company that are due for repayment after one year or more.

Tax Breaks

A reduction in the amount of taxes that an individual or company owes to the government, often used to incentivize certain behaviors or investments.

Net Working Capital

Net working capital is a financial metric that represents the difference between a company's current assets and current liabilities.