Suppose That a Change in Consumer Preferences Leads to a $50

question 90

Multiple Choice

Suppose that a change in consumer preferences leads to a $50 billion decrease in net exports.
If the value of the multiplier is 3, what is the size of the shift in the aggregate demand after
The multiplier process works through the economy?

• A) $150 billion
• B) $100 billion
• C) Less than $50 billion
• D) Cannot be determined without information on exports

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Definitions:

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Cash or other assets distributed to shareholders out of the company's earnings.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period of time, leading to net income or net loss.

GAAP

Generally Accepted Accounting Principles; a set of accounting standards, principles, and procedures that companies must follow when compiling their financial statements in the U.S.

Convertible Bonds

Bonds that can be converted into a predetermined number of a company’s shares at certain times during their life, usually at the discretion of the bondholder.