Suppose We Are Working with the Simplest Possible Keynesian-Cross Multiplier,but

question 41

Multiple Choice

Suppose we are working with the simplest possible Keynesian-cross multiplier,but with the permanent-income hypothesis figured in.If k = 0.88,and j = 0.25,the multiplier of a $1 change in government spending goes from ________ in the short run to ________ in the long run.

• A)8.33,1.28
• B)1.28,8.33
• C)8.33,4.00
• D)1.13,4.00
• E)4.54,8.33

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Definitions:

Discount Date

The last day on which a cash discount may be taken. The day on which a note is discounted (sold).

Due Date

The final day an invoice is to be paid. After that day the buyer may be charged interest. Also, the date by which a loan is to be repaid.

Remittance

Amount that a buyer actually pays after deducting a cash discount.

Discount Period

A certain number of days after the invoice date, during which a buyer may receive a cash discount. The time between a note’s discount date and its maturity date.