If the Marginal Propensity to Consume Increases, the Spending Multiplier

question 112

Multiple Choice

If the marginal propensity to consume increases, the spending multiplier _____ and the balanced budget multiplier _____.

• A) increases; increases
• B) decreases; decreases
• C) increases; remains the same
• D) decreases; remains the same

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Definitions:

Weighing Facts

The process of assessing the importance, relevance, or truth of information or evidence before making a decision or judgment.

Cognitive Dissonance Theory

A theory suggesting that individuals experience discomfort when holding two or more conflicting cognitions, leading them to change their attitudes, beliefs, or actions to reduce the dissonance.

Human Consistency

The tendency of an individual to maintain the same behaviors, attitudes, and beliefs over time.

Natural Disasters

Severe and extreme weather events or geological occurrences that cause significant damage, disruption, or loss of life, such as earthquakes, floods, or hurricanes.