Compared to the Magnitude of the Multiplier in an Economy

question 55

Multiple Choice

Compared to the magnitude of the multiplier in an economy without imports, the multiplier in an identical economy with imports is

• A) exactly the same.
• B) smaller only if imports exceed exports.
• C) always smaller.
• D) larger only if exports exceed imports.
• E) always larger.

---

Definitions:

Net Present Value

A valuation method that calculates the value of future cash flows in today's dollars by discounting them at a particular rate.

Internal Rate Of Return

The critical interest rate that nullifies the net present value of cumulative cash flows from a project.

Discount Rate

The interest rate charged to banks for borrowing short-term funds directly from the Federal Reserve, or broadly, the interest rate used to discount future cash flows to present value.

Average Account Rate

represents the average rate of return on an investment or portfolio over a specific period.