If investment increases by $100 and,as a result,gross domestic product (GDP) ultimately increases by $200,the multiplier equals _____.

A) 1
B) 2
C) 3
D) 4
E) 5

Question

If investment increases by $100 and,as a result,gross domestic product (GDP) ultimately increases by $200,the multiplier equals _____.A) 1B) 2C) 3D) 4E) 5

Abdolmoati Al.Ashkar · Accepted Answer

Final Answer : B, Explanation :  The multiplier is the ratio of the change in GDP to the initial change in investment. In this scenario, the initial change in investment is $100, and the resulting change in GDP is $200. Therefore, the multiplier is 2 (=$200/$100).

If investment increases by $100 and,as a result,gross domestic product (GDP) ultimately increases by $200,the multiplier equals _____.

A) 1
B) 2
C) 3
D) 4
E) 5

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