If Autonomous Consumption Increases, the Size of the Multiplier Would

question 220

Multiple Choice

If autonomous consumption increases, the size of the multiplier would

• A) increase.
• B) decrease.
• C) remain constant.
• D) either increase or decrease depending on the size of the change in autonomous consumption.

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Definitions:

Present Value

The present value of an amount of money or series of payments to be received in the future, calculated using a particular interest rate.

Credit Policy Change

Adjustments made to the guidelines that govern the extension of credit to customers, affecting terms of payment and eligibility.

One-Shot Approach

A strategy or method applied once to address an issue or solve a problem, without plans for repeated application or follow-up.

Net Present Value

A valuation method that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.