If an Increase in Investment Spending of $20 Million Results

question 3

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.

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Definitions:

Assets

Assets that a company possesses or has rights to, which are anticipated to bring in economic gains or advantages in the future.

Operating Cycle

The period it takes for a business to buy inventory, sell products or services, and collect cash from sales.

Current Liability

Financial obligations that are due to be paid within one year or within the normal operating cycle of a business.

Working Capital

The measure of a company's operational efficiency and short-term financial health, calculated as current assets minus current liabilities.