If the Multiplier Is 4,a $10 Billion Increase in Autonomous

question 58

Multiple Choice

If the multiplier is 4,a $10 billion increase in autonomous investment will cause a

• A)$10 billion increase in equilibrium investment
• B)$40 billion increase in equilibrium investment
• C)$40 billion increase in equilibrium real GDP demanded
• D)$400 billion increase in equilibrium real GDP demanded
• E)$40 billion increase in consumption spending

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Definitions:

Implicit Costs

The opportunity costs of using resources owned by the firm for its own use, rather than selling those resources externally.

Economic Profits

The surplus remaining after deducting all costs, including opportunity costs, from total revenues, indicating the financial performance exceeding the break-even point.

Implicit Costs

The opportunity costs that arise from using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.

Normal Profit

The lowest amount of profit a company must earn to stay competitive and cover its opportunity costs.