If an Increase in Investment Spending of $50 Million Results

question 288

Multiple Choice

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP,then

• A)the multiplier is 0.125.
• B)the multiplier is 3.5.
• C)the multiplier is 8.
• D)the multiplier is 50.

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Definitions:

United States

A country in North America, consisting of 50 states and a federal district, known for its large economy and cultural influence worldwide.

Outstanding Shares

The total number of shares of a corporation that have been issued and are held by shareholders, including restricted shares owned by company insiders.

Book Value

The net value of an asset as recorded on the balance sheet, calculated by deducting the accumulated depreciation or amortization from the original cost of the asset.

Fair Market Value

The price an asset would sell for on the open market when certain conditions are met, such as both the buyer and seller are knowledgeable, willing, and not under duress.