The Multiplier-Accelerator Model

question 114

Multiple Choice

The multiplier-accelerator model

• A) suggests that a downturn in real GDP will lead to a sharp fall in investment, which leads to further reductions in GDP through the multiplier.
• B) links investment spending to stock prices.
• C) emphasizes that current investment spending depends negatively on the expected future growth of GDP.
• D) emphasizes the role of real interest rates and taxes.

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