The Multiplier Effect

question 110

Multiple Choice

The multiplier effect

• A) increases the MPC.
• B) generates instability in autonomous expenditure.
• C) magnifies small changes in spending into larger changes in real GDP.
• D) promotes stability of the general price level.

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Definitions:

Hydrological Cycle

The continuous movement of water on, above, and below the surface of the Earth, also known as the water cycle.

Erosion

The process by which soil, rock, and other surface material are worn away by wind, water, or other natural agents.

Combustion

A chemical reaction that occurs when a substance reacts with oxygen to produce heat and light, commonly seen in burning.

Carbon Dioxide

A clear, scentless gas that is a byproduct of burning carbon-based substances and the respiration process, which is utilized by plants during the process of photosynthesis.