International Trade Tends to Lower the Value of the Multiplier

question 1

Multiple Choice

International trade tends to lower the value of the multiplier because

• A)imports fall as GDP increases.
• B)net exports fall as GDP increases.
• C)net exports tend to rise as GDP increases.
• D)exports fall as GDP increases.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption or wear and tear.

Investment

This is the allocation of resources, usually money, in the expectation of generating an income or profit.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Simple Rate

Simple rate often refers to the straightforward, non-compounded percentage in various financial calculations, such as interest rates.