Suppose That in a Particular Economy, the Multiplier Is Equal

question 356

Multiple Choice

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

• A) at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment.
• B) at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment.
• C) at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment.
• D) at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment.

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Definitions:

DuPont Formula

A method for analyzing components of return on equity to understand what factors are driving or affecting it.

Profit Margin

A financial metric used to evaluate a company's financial health by revealing the percentage of revenue that exceeds the costs associated with making or selling its products or services.

Investment Turnover

A financial ratio that measures the efficiency with which a company utilizes its assets to generate revenue.

Over Budget

A situation where actual spending exceeds the anticipated or planned budget allocation.