The Spending Multiplier Indicates That

question 70

Multiple Choice

The spending multiplier indicates that:

• A) changes in investment, government, or consumption spending trigger much larger changes in real GDP.
• B) an autonomous increase in saving will cause output to rise by a multiple of the additional saving.
• C) a market economy will be more stable than classical economists thought.
• D) the marginal propensity to consume is greater than one.

---

Definitions:

Preferred Solution

The most desirable option or course of action among a set of alternatives based on specific criteria or objectives.

Managers' Intuition

The innate ability of managers to make decisions or solve problems based on their instincts and experiences rather than only analytical processes.

Probabilities

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1.