The Multiplier Is Greater Than 1 Because the Change in Autonomous

question 319

Multiple Choice

The multiplier is greater than 1 because the change in autonomous expenditure leads to

• A) more investment.
• B) more saving.
• C) less consumption expenditure.
• D) more induced expenditure.

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Definitions:

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

Inelastic Demand

This economic concept describes a situation where the demand for a product does not significantly change with the price change.

Contribution Margin

A financial metric that represents the amount of revenue from sales that exceeds variable costs, used to cover fixed expenses and generate profit.

Unit Variable Cost

The cost associated with producing one additional unit of product, which includes labor, materials, and other variable expenses.