If the Spending Multiplier Is Equal to 4, Then a $25

question 164

Multiple Choice

If the spending multiplier is equal to 4, then a $25 initial increase in investment spending will lead to a:

• A)$25 increase in real GDP.
• B)$1 decrease in real GDP.
• C)$1 increase in real GDP.
• D)$100 decrease in real GDP.
• E)$100 increase in real GDP.

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Definitions:

Urbanization

The process by which towns and cities are formed and become larger as more people begin living and working in central areas, leading to various social, economic, and environmental changes.

Know-Nothing Party

Nativist, anti-Catholic third party organized in 1854 in reaction to large-scale German and Irish immigration; the party’s only presidential candidate was Millard Fillmore in 1856.

Fugitive Slave Act

Legislation passed in the United States that allowed for the capture and return of runaway enslaved people within the territory of the United States.