If an Increase in Investment Spending of $50 Million Results

question 288

Multiple Choice

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP,then

• A)the multiplier is 0.125.
• B)the multiplier is 3.5.
• C)the multiplier is 8.
• D)the multiplier is 50.

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Definitions:

Work in Process

Inventory that includes all materials, labor, and overhead costs for products in the process of production but not yet complete.

Factory Overhead

All indirect costs associated with the production of goods, such as utilities, rent, and maintenance of equipment, that are not directly tied to a specific product.

Finished Goods

Items that have finished the production process and are available for purchase.

Factory Overhead

All indirect costs involved in the production process, such as utilities and maintenance, not directly tied to production output.