If an Increase in Investment Spending of $20 Million Results

question 207

Multiple Choice

If an increase in investment spending of $20 million results in a $200 million increase in equilibrium real GDP, then

• A)the multiplier is 0.1.
• B)the multiplier is 1.
• C)the multiplier is 10.
• D)the multiplier is 100.
• E)the multiplier is 180.

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Definitions:

Liabilities

Liabilities are financial obligations a company owes to external parties, such as loans, accounts payable, and mortgages.

Accrual

An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.

Accrual

The accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.

Accounting Cycle

The process used by entities to analyze and record transactions, adjust the records at the end of the period, prepare financial statements, and prepare the records for the next cycle.