The Multiplier Applies to

question 177

Multiple Choice

The multiplier applies to

• A) investment but not to net exports or government spending.
• B) investment, net exports, and government spending.
• C) increases in spending but not to decreases in spending.
• D) spending by the private sector but not by the public sector.

---

Definitions:

Positive Profit

Positive Profit occurs when the total revenue of a business exceeds its total costs.

Total Revenue

Total Revenue refers to the total receipts from sales of goods or services by a firm over a specified period.

Variable Costs

refer to expenses that change in proportion to the activity of a business, such as costs for raw materials or production volume.

Fixed Costs

Costs that do not change with the level of output produced, such as rent or salaries.