The Formula for the Multiplier That Results from a Change

question 18

Multiple Choice

The formula for the multiplier that results from a change in autonomous net taxes is

• A)-MPC/(1 - MPC)
• B)1
• C)MPC/(1 - MPC)
• D)1/(1 - MPC)
• E)-1/(1 - MPC)

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Definitions:

Financial Break-even

Financial break-even is the point at which a company's revenues exactly cover its expenses and financial charges, resulting in neither profit nor loss.

Net Present Value

The difference between the current value of cash inflows and the current value of cash outflows over a period of time, used to assess the profitability of an investment.

Project

A planned set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.