Suppose That the Value of the Multiplier Has Decreased in Recent

question 67

Multiple Choice

Suppose that the value of the multiplier has decreased in recent years. Which of the following could have caused this?

• A) Consumption has become less sensitive to changes in the interest rate.
• B) The costs of inventory storage have risen.
• C) Changes in the way the unemployment compensation fund is financed have made it less expensive for firms to lay off workers.
• D) There has been an increase in the demand for imported goods.

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Definitions:

Weighted-average Shares

A calculation used in financial reporting that adjusts the number of outstanding shares for their time outstanding during the calculation period.

Retained Earnings

Earnings accumulated by a company thus far, after subtracting any dividends or distributions made to shareholders.

Price-earnings Ratio

A valuation metric for companies, representing the ratio of a company's share price to its per-share earnings.

Earnings per Share

A financial ratio indicating the proportion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.