The Multiplier Principle Is Important Because It

question 98

Multiple Choice

The multiplier principle is important because it

• A) was central to economic theory before Keynes.
• B) implies that investment will help stabilize the economy.
• C) shows why small shifts in investment have a powerful influence on national income.
• D) illustrates why a small change in income causes a large change in saving.

---

Definitions:

Lowering Alpha

The process of reducing the alpha level, or the significance level, to decrease the likelihood of committing a Type I error in statistical hypothesis testing.

Type II Error

The error that occurs when a false null hypothesis is not rejected, implying a miss in detecting an actual effect or difference.

Highly Significant

A statistical term indicating that the results observed are very unlikely to have occurred by chance alone, often used for results with very low p-values.

Statistical Significance

Indicates that the probability of the observed results occurring under the null hypothesis is low, suggesting the results are not due to random chance.