The Multiplier Effect

question 176

Multiple Choice

The multiplier effect

• A) tells us nothing about how increases in investment spending affect GDP
• B) tells us that a change in investment spending changes equilibrium GDP by more than the change in investment
• C) works only for increases in investment
• D) is relevant only in situations where the marginal propensity to consume cannot be determined
• E) is relevant only in situations in which the MPC is between 0.5 and 0.7.

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Definitions:

Active Process

A procedure or operation that involves energy expenditure and action to achieve a specific result or change.

Disease Process

The disease process refers to the sequence of events involved in the development and progression of a disease, including its cause, symptoms, and effects on the body.

Diaphoresis

Excessive sweating, often due to an underlying medical condition or physiological response to stress.

Inattention

A lack of focus, concentration, or attentiveness to a task or the environment.