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

Quizplus · Accepted Answer

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