Economists Agree That the Multiplier Effect on Real Output Is

question 3

Multiple Choice

Economists agree that the multiplier effect on real output is close to zero when

• A)inflation is very low in an economy
• B)an economy is at or near full employment
• C)the national debt is relatively small.
• D)"shovel-ready" projects exist.
• E)an economy is in an inflationary gap.

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Definitions:

Operating Activities

Activities that relate directly to the primary business operations of an organization, such as sales, provision of services, manufacturing of goods, etc.

Depreciation Expense

The allocation of an asset's cost over its useful life, representing the wear and tear, deterioration, or obsolescence of the asset.

Cash Flows

The total amount of money being transferred into and out of a business, particularly in terms of liquidity and financial planning.

Noncash Asset

Assets that cannot be easily converted into cash, such as buildings, equipment, and inventory.