If a $50 Billion Decrease in Investment Spending Causes Income

question 31

Multiple Choice

If a $50 billion decrease in investment spending causes income to decline by $50 billion in the first round of the multiplier process and by $25 in the second round,the multiplier in the economy is:

• A) 2.
• B) 3.33.
• C) 5.
• D) 10.

---

Definitions:

Extraction Costs

The expenses associated with the removal of raw materials from the earth or the harvesting of natural resources.

User Costs

Expenses incurred by consumers or firms for the use of assets, services, or capital, which can affect decisions on consumption or investment.

Price of Resource

The cost associated with acquiring, producing, or utilizing a resource, which may include materials, labor, or capital.

Optimal Extraction Level

The most efficient point at which a resource can be extracted or harvested to balance usage and sustainability over time.