The Impact of the Multiplier Effect Is To

question 2

Multiple Choice

The impact of the multiplier effect is to:

• A) smooth out the up and down swings of the business cycle.
• B) promote price stability.
• C) magnify small changes in spending into much larger changes in real GDP.
• D) reduce the impact of an increase in investment on output and employment.

---

Definitions:

Current Assets

Resources anticipated to be turned into cash, liquidated, or utilized within a 12-month period or over the length of the business's operational cycle, whichever duration is more extended.

Fixed Assets

Long-term tangible assets used in the operations of a business that are not expected to be converted to cash in the short term, such as buildings, machinery, and equipment.

Amortization Expense

The portion of the cost of a fixed asset deducted from revenue over its useful life for accounting purposes.

Operating Expenses

The costs associated with the day-to-day operations of a business, not including the cost of goods sold.