Which of the Following Defines the Government Purchases Multiplier

question 50

Multiple Choice

Which of the following defines the government purchases multiplier?

• A) 1/MPC+ MPI
• B) 1/(1 - MPC)
• C) MPC/(1 - MPC)
• D) (1 - MPC)/MPC

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Definitions:

Price-Earnings Ratio

Price-earnings ratio is a valuation metric comparing a company's current share price relative to its per-share earnings, used to gauge if a stock is over or undervalued.

Earnings Per Share

A measure of a company's profitability, calculated as the profit available to common shareholders divided by the average number of common shares outstanding.

Working Capital

The variance between a business's present assets and its present debts, which demonstrates the firm's liquidity.

Common Stock

A type of equity security that represents ownership in a corporation, with rights to vote on corporate matters and receive dividends.