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

Name: If investment increases by $100 and,as a result,GDP ultimately increases by $200,the multiplier equals A)1 B)2 C)3 D)4 E)5
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Question

Quizplus · Accepted Answer

The multiplier measures the ratio of the overall change in GDP to an initial change in investment. In this case, the change in GDP is twice the change in investment, so the multiplier is 2.

If Investment Increases by $100 And,as a Result,GDP Ultimately Increases