The Multiplier Applies to

question 177

Multiple Choice

The multiplier applies to

• A) investment but not to net exports or government spending.
• B) investment, net exports, and government spending.
• C) increases in spending but not to decreases in spending.
• D) spending by the private sector but not by the public sector.

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Definitions:

Endogenous

Originating from within an economic model or system; refers to factors that are explained by the internal workings of the model.

Exogenous

Factors or variables that are external to the economic model and not determined within the model itself.

Frictional Unemployment

Frictional unemployment is short-term and voluntary unemployment that occurs when people are between jobs or entering the workforce for the first time, often due to personal choices or circumstances.

Economic Activity

Actions that involve the production, distribution, and consumption of goods and services within an economy.