The Spending Multiplier Is Defined As

question 58

Multiple Choice

The spending multiplier is defined as:

• A) the ratio of the change in equilibrium real GDP to the initial change in spending.
• B) the change in initial spending divided by the change in personal income.
• C) 1 / (marginal propensity to consume).
• D) 1 / (1 − marginal propensity to save).

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Definitions:

Capacity

Pertains to the highest amount of production a business can maintain for creating a product or delivering a service.

Supply Chain

A network between a company and its suppliers to produce and distribute a specific product to the final buyer, involving the flow of materials, information, and finances.

Efficiency

The degree to which an organization or process accomplishes its intended goals with a minimum of waste, expense, or unnecessary effort.

Responsiveness

The ability of a company to quickly adapt to changes in market conditions or demand.