The Table Given Below Reports the Value of Real GDP

question 20

Multiple Choice

The table given below reports the value of real GDP and its components consumption (C) , investment (I) , exports, and imports for two consecutive years.
Table 10.3
$\begin{array}{l}\begin{array}{|c|c|c|c|c|c|}\hline & \text { Equilibrium } & & & & \\\hline & \text { Real GDP } & \text { C } & \text { I } & \text { Exports } & \text { Imports } \\\hline \text { Year 1 } & \$ 9,350 & \$ 7,500 & \$ 1,350 & \$ 1,800 & - \\\hline \text { Year 2 } & \$ 11,450 & \$ 8,900 & - & \$ 2,350 & \$ 1,600 \\\hline\end{array}\\\text { Assume that government spending is zero for this economy. }\end{array}$
-Refer to Table 10.3. What will be the value of the spending multiplier?

• A) 1
• B) 0.47
• C) 5
• D) 1.25
• E) 2.13

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Definitions:

Revenues

The total income generated by a company from its business activities, typically from the sale of goods and services to customers.

Common Stock

A type of security representing ownership in a corporation, giving holders a share of profits in the form of dividends and voting rights in corporate matters.

Liability Accounts

Financial obligations or debts of a business that are recorded on its balance sheet.

Asset Accounts

These accounts record resources owned or controlled by a company that have economic value and can provide future benefits.