The Reason That an Increase in Autonomous Spending Leads to an Even

question 37

Multiple Choice

The reason that an increase in autonomous spending leads to an even greater increase in equilibrium level of output is that

• A)as firms increase output to meet demand, income increases, and this induces more consumption spending
• B)the multiplier increases with an increase in autonomous spending
• C)prices rise with increased output and this raises nominal GDP
• D)people save less as their income increases
• E)there is unwanted inventory accumulation, leading firms to lower prices and encouraging increased consumer spending

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