If an Increase in Investment Spending of $30 Million Results

question 80

Multiple Choice

If an increase in investment spending of $30 million results in a $300 million increase in equilibrium real GDP, then the multiplier is:

• A)1.0.
• B)10.
• C)100.
• D)0.1.

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Definitions:

Representativeness Bias

A cognitive bias where individuals inaccurately judge the probability of an event by comparing it to an existing prototype in their minds.

Heuristics

Heuristics represent simplified strategies or rules of thumb that individuals use to make decisions or solve problems quickly when faced with complex information or limited time.

Uncertainty Reduction

The process of acquiring information to minimize the uncertainties about decision-making or more fully understand a situation.

Optimizing

The process of making the best or most effective use of a situation, resource, or opportunity with the goal of achieving the optimum outcome.