Figure 12-3 -Refer to Figure 12-3.Suppose That Investment Spending Increases by $10

question 112

Multiple Choice

Figure 12-3
-Refer to Figure 12-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2.If the MPC is 0.9,then what is the change in GDP?

• A)$9 million
• B)$10 million
• C)$90 million
• D)$100 million

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements.

U.S. GAAP

United States Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in the U.S.

Convertible Debt

A type of bond or loan that can be converted into a predetermined amount of the company's equity, usually at the discretion of the debt holder.

LIFO Inventory

An inventory valuation method (Last In, First Out) where the most recently produced or acquired items are the first to be expensed as cost of goods sold, affecting the company's books during periods of inflation.