Which of the Following Is True About the Multiplier

question 2

Multiple Choice

Which of the following is true about the multiplier?

• A) Its measures the relationship between an increase in spending and an increase in inflation
• B) Its measures the relationship between an increase in spending and an increase in imports
• C) The size of the multiplier will be bigger if the marginal propensity to consume is bigger
• D) The size of the multiplier will be bigger if the marginal propensity to import is bigger

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Definitions:

Standard Cost System

An accounting method that uses cost estimates to predict the cost of producing or acquiring goods.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products based on a related activity.

Electrical Motor

A device that converts electrical energy into mechanical energy, commonly used in a wide range of applications from household appliances to industrial machinery.

Standard Labor-Hours

The estimated time that should be required to complete a single unit of production, serving as a benchmark for performance and cost control.