The Aggregate Demand Multiplier Effect Says That an Initial Increase

question 61

Multiple Choice

The aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an induced

• A) increase in production expenditure.
• B) increase in exports.
• C) increase in consumption expenditure.
• D) decrease in the price level.
• E) increase in government expenditures on goods and services.

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Definitions:

Profit Margin

A financial metric used to assess a company's profitability by dividing net income by net sales, usually expressed as a percentage.

Ceiling

In accounting, it refers to the upper limit placed on the value of an asset or a group of assets, often to prevent overestimation.

Principle of Conservatism

An accounting guideline where revenue and assets are not overestimated while liabilities and expenses are not underestimated.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.