The Multiplier Effect Indicates That

question 120

Multiple Choice

The multiplier effect indicates that:

• A)a decline in the interest rate will cause a proportionately larger increase in investment.
• B)a change in aggregate expenditures will change aggregate income by a larger amount.
• C)a change in aggregate expenditures will increase aggregate income by the same amount.
• D)a small increase in total income will generate a large change in aggregate expenditures.

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Definitions:

Desk

A piece of furniture with a flat top and legs, used for writing, working or using a computer.

Box of Tools

Metaphorically refers to a set of skills, strategies, or resources available to individuals or organizations for performing tasks or solving problems.

Economic Goods

Items or services that have a price and are scarce in relation to their demand, thus necessitating economic decision-making.

Scarce Resources

Raw materials, labor, and capital that are limited in availability, requiring societies to make decisions on their allocation and use.