An Increase in Investment Can Lead to a Greater Increase

question 40

Multiple Choice

An increase in investment can lead to a greater increase in aggregate demand if the value of the spending multiplier is:

• A)greater than 1.
• B)less than 1 but more than zero.
• C)negative.
• D)exactly equal to zero.
• E)exactly equal to one.

---

Definitions:

Input Prices

The cost of resources used in the production of goods and services.

MRTS

Marginal Rate of Technical Substitution, the rate at which one factor must decrease as another increases to keep output constant.

Isoquant Map

An isoquant map is a graph showing combinations of inputs that yield the same level of output, used in economics to depict production efficiencies and substitutability between inputs.

Printing Presses

Machines used for transferring text and images onto paper or similar materials, pivotal in the history of publishing and information dissemination.