The Multiplier Effect Refers to the Fact That a Change

question 91

Multiple Choice

The multiplier effect refers to the fact that a change in spending (aggregate demand) will

• A) increase the money supply.
• B) cause prices to rise by some multiple of the initial increase in spending.
• C) cause nominal output to rise by some multiple of the initial increase in spending.
• D) reduce prices by some multiple of the increase in spending.

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Definitions:

Inventory Financing

A line of credit or loan dedicated to purchasing inventory, using the inventory itself as collateral.

Control Agent

An entity or individual assigned to oversee and manage specific aspects of a project, process, or operation to ensure it meets predetermined criteria or standards.

Current Income

This refers to the total amount of income generated from various sources, including wages, investments, and other types of income over a current period of time.

Short-term Finance

Financing obtained for a time period of less than one year, often used to address immediate operational needs.