Assume There Is a Multiplier Effect, Some Crowding Out, and No

question 122

Multiple Choice

Assume there is a multiplier effect, some crowding out, and no accelerator effect. An increase in government expenditures changes aggregate demand more,

• A)the smaller the MPC and the stronger the influence of income on money demand.
• B)the smaller the MPC and the weaker the influence of income on money demand.
• C)the larger the MPC and the stronger the influence of income on money demand.
• D)the larger the MPC and the weaker the influence of income on money demand.

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Definitions:

Credits

Entries in accounting that increase liabilities or equity accounts, or decrease asset or expense accounts, reflecting transactions.

Debits

Entries in accounting that are used to record increases in assets or expenses and decreases in liabilities, equity, and revenue.

Capital Balance

The amount of money that a business or individual has invested in an entity, not including profits or losses from operations.

Net Income

The residual profit of an enterprise after deducting all expenditures and tax payments from its overall revenue.