Assume There Is No Government or Foreign Sector

question 173

Multiple Choice

Assume there is no government or foreign sector. If the multiplier is 10, a $10 billion increase in planned investment will cause aggregate output to increase by

• A) $1 billion.
• B) $5 billion.
• C) $10 billion.
• D) $100 billion.

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Definitions:

Productivity of Labor

The output per labor hour or worker, indicating how efficiently labor is used in the production of goods and services.

Labor Resource Market

The market in which individuals offer their labor to employers in exchange for wages.

Substitute Input

An alternative resource or material used in the production process that can replace another in response to changes in market conditions or prices.

Tablet-Computer Industry

The sector of the tech industry that designs, manufactures, and sells tablet computers, a type of portable computing device.