The Multiplier Is the Ratio of the Change in ________

question 313

Multiple Choice

The multiplier is the ratio of the change in ________ to a change in ________.

• A) the MPC; the MPS
• B) the equilibrium level of output; some autonomous variable
• C) the level of saving; the level of consumption
• D) autonomous consumption; induced consumption

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Definitions:

Maturity Risk Premium

The additional yield that investors demand to compensate for the risk of holding a longer-term debt instrument, over and above the risk of short-term instruments.

Default Risk

The risk that a borrower will not make the required payments on their debt obligations, leading to a default.

Semiannual Coupon

Interest payments made to bond investors every six months as part of the bond's fixed-income return.

Bond Rating

An evaluation provided by a credit rating agency regarding the creditworthiness of a bond issuer, affecting the interest rates and investment appeal of its bonds.