The Multiplier Shows the Relationship Between Changes in a Component

question 59

True/False

The multiplier shows the relationship between changes in a component of spending, say, investment,
and the consequent changes in real income and output.

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Definitions:

Work Effect

The impact on labor supply and productivity due to changes in economic policies or conditions.

Basic Assumption

An underlying principle or idea that is accepted as true without proof, forming the basis for further reasoning or behavior.

Level Of Investment

The amount of spending by businesses on capital goods, such as factories and machinery, which can influence economic growth.

Keynes

Refers to John Maynard Keynes, an economist famous for his ideas that in times of low demand, public sector investments are critical to economic stability and growth.