If a $2 Billion Increase in Investment Brings About a $5

question 144

Multiple Choice

If a $2 billion increase in investment brings about a $5 billion increase in equilibrium expenditure,we know that the multiplier equals

• A)10.
• B)2.5.
• C)4.
• D)5.
• E)3.

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Definitions:

Marginal Revenue Curve

A graphical representation showing the extra revenue obtained from selling one more unit of a good or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping, indicating an inverse relationship between price and quantity demanded.

Price Maker

A market participant with the power to influence the price of a good or service, typically due to a lack of significant competition, controlling a large portion of the market supply.

Downsloping

Characteristic of a demand curve, indicating that as the price decreases, the quantity demanded increases, assuming all other factors remain constant.