If a $100 Billion Decrease in Investment Spending Causes Income

question 208

Multiple Choice

If a $100 billion decrease in investment spending causes income to decline by $100 billion in the first round of the multiplier process and by $75 billion in the second round, income will eventually decline by

• A)$200 billion.
• B)$300 billion.
• C)$400 billion.
• D)$500 billion.

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Definitions:

Drowsy

A state of feeling sleepy or lethargic, often leading to a decreased level of alertness and responsiveness.

Barbiturates

A category of drugs that act as central nervous system depressants and are used as sedatives, hypnotics, or anesthetics.

Ethyl Alcohol

A colorless, volatile liquid, also known as ethanol, used in alcoholic beverages, as a solvent, and as a fuel.

Sedative-Hypnotic

A category of drugs that depresses the central nervous system, inducing calm (sedation) or sleep (hypnosis).