Figure 10-2 ​

question 126

Multiple Choice

Figure 10-2
​
-One reason the oversimplified multiplier is incorrect is that inflation

• A)increases the multiplier by increasing investment spending.
• B)increases the multiplier by increasing consumer spending.
• C)decreases the multiplier by increasing net exports.
• D)decreases the multiplier by decreasing consumer spending.

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Definitions:

Economic Reason

The underlying rationale or motive behind financial decisions or actions, often based on maximizing efficiency or profit.

Transactions Demand

The need to hold money for the purpose of conducting transactions in the short term.

Abrupt Price Drop

A rapid and significant decrease in the market price of a security or commodity.

Blanket Liens

A legal claim allowing a lender to seize nearly all of a borrower's assets if they default on a loan.