The Multiplier Is Greater Than 1 Because the Change in Autonomous

question 319

Multiple Choice

The multiplier is greater than 1 because the change in autonomous expenditure leads to

• A) more investment.
• B) more saving.
• C) less consumption expenditure.
• D) more induced expenditure.

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Definitions:

Forecasting Risk

The possibility of error in projecting future values such as revenues, costs, or stock prices, due to uncertainty about future events.

Initial Investment

Refers to the initial capital outlay or amount of money invested to start a project or investment.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Financial Break-Even

The point at which revenues equal expenses and neither profit nor loss is realized.