The Multiplier Effect Exists Because a Change in Autonomous Expenditure

question 347

Multiple Choice

The multiplier effect exists because a change in autonomous expenditure

• A) leaves the economy in the form of imports.
• B) leads to changes in income, which generate further spending.
• C) prompts further exports.
• D) will undergo its complete effect in one round.

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Definitions:

Activity Variance

The difference between the actual and budgeted amount of activity, often used in variance analysis to identify and manage deviations in performance.

Direct Labor

The wages or costs associated with workers who are directly involved in the production of goods or services.

Activity Level

The volume of production or the rate of operations in a business activity.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for more precise cost control.