If the Spending Multiplier Is Greater Than 1

question 115

Multiple Choice

If the spending multiplier is greater than 1.0,a $200 billion increase in autonomous investment will cause:

• A)equilibrium investment to increase by less than $200 billion.
• B)equilibrium investment to decrease by more than $200 billion.
• C)equilibrium real GDP demanded to increase by more than $200 billion.
• D)equilibrium real GDP demanded to decrease by less than $200 billion.
• E)equilibrium saving to decrease by more than $200 billion.

---

Definitions:

Conditioned Stimulus

In classical conditioning, a previously neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response that is initially elicited by the second stimulus is eventually elicited by the first stimulus alone.

Conditioned Response

A learned reaction to a previously neutral stimulus that has become associated with an unconditioned stimulus after conditioning.

Conditioned Stimulus

An initially neutral trigger that, following its association with an unconditioned stimulus, ultimately elicits a conditioned reaction.