If $10 Billion of Spending by the Government Results in a $40

question 84

Multiple Choice

If $10 billion of spending by the government results in a $40 billion increase in aggregate demand,what is the multiplier?

• A)0.25
• B)1
• C)4
• D)3

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from total revenue; also known as net profit.

Inventory System

A method for keeping track of the quantity, location, and status of goods a company has in stock.

Revenue Recorded

The process of documenting income earned by a business during a specific period, usually upon the delivery of goods or services.

Cost Flow Assumption

The method used to allocate costs to inventory and cost of goods sold, such as FIFO, LIFO, or weighted average.