If a $200 Billion Increase in Investment Spending Creates $200

question 103

Multiple Choice

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the multiplier in the economy is

• A) 4.
• B) 5.
• C) 3.33.
• D) 2.5.

---

Definitions:

Nonparticipating

A term often used in insurance and investment indicating that the holder or policy does not have the right to share in dividends or profits.