The Multiplier Is Greater Than 1 Because the Change in Autonomous

question 305

Multiple Choice

The multiplier is greater than 1 because the change in autonomous expenditure leads to __________.

• A) more saving
• B) less consumption expenditure
• C) more investment
• D) more induced expenditure

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Definitions:

Trade Deficits

A situation where a country's imports of goods and services exceed its exports, resulting in a net outflow of domestic currency to foreign markets.

Real GDP

Gross Domestic Product adjusted for inflation, which reflects the value of all goods and services produced by an economy in a given year in base-year prices.

Price Level

The average price point of the entirety of goods and services in the economic scope.

Personal Consumption Expenditures

Refers to the value of goods and services purchased by households for the purpose of consumption.