The Figure Above Shows Two Aggregate Expenditure Lines

question 29

Multiple Choice

The figure above shows two aggregate expenditure lines.
-In the figure above, what is the size of the multiplier?

• A) 4.0
• B) 0.25
• C) $2 trillion
• D) $0.5 trillion
• E) More information is needed to determine the size of the multiplier.

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Definitions:

Investment Opportunity Set

The range of possible investment options available to an investor, based on their risk tolerance and investment objectives.

Efficient Frontier

A graph representing the set of portfolios that provides the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Capital Market Line

A line that depicts the risk-reward profile of investable assets, showing the rate of return for varying levels of risk, based on the market risk premium and the risk-free rate.

Minimum-Variance Point

The point on a portfolio's efficient frontier at which the portfolio has the lowest level of volatility or risk for its level of expected return.