The Multiplier Effect

question 6

Multiple Choice

The multiplier effect:

• A)reduces the MPC.
• B)magnifies small changes in spending into larger changes in output and income.
• C)promotes stability of the general price level.
• D)lessens upswings and downswings in business activity.

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Definitions:

Power

The capacity or ability of individuals or organizations to direct or influence the behavior of others or the course of events.

Bureaucratic Control

The influence of behavior through authority, policies, procedures, job descriptions, budgets, and day-to-day supervision.

Behaviour

The behavior of a person or collective when responding to outside or inside triggers.

Day-To-Day Supervision

The ongoing, immediate oversight of activities and tasks, typically aimed at ensuring they are accomplished efficiently and correctly.