If the Multiplier Is 3, a $750,000 Increase in Autonomous

question 82

True/False

If the multiplier is 3, a $750,000 increase in autonomous expenditure increases equilibrium expenditure by $2.25 million.

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Definitions:

Retained Earnings

The cumulative amount of net income earned by a company that is retained and not distributed to shareholders as dividends.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.

Net Income

The remaining earnings of a corporation after deducting all operating costs and tax obligations from its revenue.

Dividends Declared

The action by a company's board of directors to distribute a specified amount of the company’s earnings to its shareholders.