If an Increase in Investment of $100 Billion Generates an Increase

question 119

Multiple Choice

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP, the multiplier is

• A)20
• B)50
• C)1.50.
• D)5.00.

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Definitions:

Natural Monopoly

A scenario in the marketplace where only one company can offer a product or service more affordably than any would-be rival, frequently because of the cost advantages associated with large-scale operations.

Marginal Cost

The change in total cost that arises when the quantity produced changes by one unit; essentially the cost of producing one more unit of a good.

Government Operation

Activities carried out by the government, including regulation, provision of public services, and maintenance of law and order.

Average Costs

The total costs divided by the total output produced, a measure of cost efficiency for production.