If Investment Increases by $150 And, in Response, Equilibrium Expenditure

question 332

Multiple Choice

If investment increases by $150 and, in response, equilibrium expenditure rises by $600

• A) the multiplier is 0.25.
• B) the multiplier is 4.0.
• C) the MPC is 4.
• D) the slope of the AE curve is 3.0.

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Definitions:

Services

Economic activities that are intangible, are not stored, and do not result in ownership transfer from the service provider to the service receiver.

Double-Entry

An accounting principle where every transaction is entered twice, as a debit in one account and a credit in another, to keep the accounting equation balanced.

Accounting Equation

The fundamental principle of accounting that represents the relationship between assets, liabilities, and owner's equity: Assets = Liabilities + Owner's Equity.

Journal Entry

A record in the books of accounts that represents a business transaction, including information like date, accounts affected, and amounts.