Because of the Multiplier, a One- Time Change in Expenditure

question 87

Multiple Choice

Because of the multiplier, a one- time change in expenditure will

• A)have little secondary effect on real GDP.
• B)decrease saving and investment activity and thereby decrease future real GDP.
• C)expand real GDP by an infinite amount.
• D)generate more additional real GDP than the initial change in expenditure.

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Definitions:

Consumption

The act of using goods and services to satisfy needs and wants, a key concept in economics relating to how goods and services are used.

Satisfaction

The degree of contentment or pleasure experienced from the fulfillment of a desire or the consumption of goods and services.

Marginal Utility

The increased value or pleasure an individual obtains from using another unit of a certain service or good.

Total Satisfaction

A measure of the overall happiness or contentment derived from consuming a combination of goods and services.