Which of the Following Is an Example of the Multiplier

question 88

Multiple Choice

Which of the following is an example of the multiplier at work as a result of an increase in consumption expenditures?

• A)Consumers compete with the government by increasing their expenditures,causing businesses to increase their investments to satisfy the increased demand.
• B)Consumption expenditures increase inflation,which reduces real incomes;consumer expenditures and investment decline,which reduces aggregate spending.
• C)Households and businesses receive income from consumption expenditures;they spend a portion of this new income;these expenditures,in turn,generate income for other businesses and households,which in turn spend a portion of the new income,and so on.
• D)Consumption expenditures stimulate investment in new plants and equipment to produce goods and services for the government, which provides fewer jobs and decreases incomes.

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Definitions:

Debit Card

A plastic card that deducts money directly from a cardholder's checking account to pay for a purchase.

Pays By Check

The act of making a payment for goods or services with a written and signed paper directing a bank to pay money from the payer's account.

Compliment

An expression of praise, commendation, or admiration.

Maintenance Skills

These are the abilities required to repair, care for, and keep machinery, buildings, or equipment in good condition.