Assume There Is No Government or Foreign Sector

question 148

Multiple Choice

Assume there is no government or foreign sector. If the MPS is 0.05, the multiplier is

• A) 0.95.
• B) 10.
• C) 20.
• D) 50.

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Definitions:

Interest Rates

The percentage charged on the total amount of borrowed money or paid on deposited funds.

Maturities

The set dates when the principal amount of a debt instrument, such as a bond, is due to be paid back to the investor.

Bond Prices

The market value of a bond, which inversely changes with interest rates.

Subordinated Debt

Debt with a lower priority for the payment of interest and principal than other (senior) debt.