If the Multiplier Is 4 and Investment Spending Falls by $100

question 99

Multiple Choice

If the multiplier is 4 and investment spending falls by $100 billion, the change in real GDP will be:

• A) -$400 billion.
• B) $400 billion.
• C) $25 billion.
• D) -$25 billion.

Identify the characteristics of useful information and its importance in decision-making.

Recognize the significance of computer and information competency for effective decision-making.

Understand how management information systems support organizational functions.

Recognize the impact of information technology on organizational structure and barriers.

---

Definitions:

Binding Price Floor

A government or regulatory-imposed price control that sets the minimum price that can be charged for a good or service, above the equilibrium price, leading to potential surpluses.

Surplus

Surplus refers to the amount by which production, resources, or inventory exceeds what is needed or used, often resulting in excess supply.

Nonbinding Price Floor

A minimum price set by the government that is below the equilibrium price, having no effect on the market.

Minimum Wage

The lowest legal hourly wage that employers can pay to workers, set by government regulation.