Using the IS-LM Analysis, If the LM Curve Is Not

question 31

Multiple Choice

Using the IS-LM analysis, if the LM curve is not horizontal, the multiplier for an increase in government spending is ______ for an increase in government purchases using the Keynesian-cross analysis.

• A) larger than the multiplier
• B) the same as the multiplier
• C) smaller than the multiplier
• D) sometimes larger and sometimes smaller than the multiplier

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Definitions:

Profit Margin

A financial metric used to assess a company's profitability by dividing net income by net sales, usually expressed as a percentage.

Ceiling

In accounting, it refers to the upper limit placed on the value of an asset or a group of assets, often to prevent overestimation.

Principle of Conservatism

An accounting guideline where revenue and assets are not overestimated while liabilities and expenses are not underestimated.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.