The Multiplier Principle Illustrates That

question 112

Multiple Choice

The multiplier principle illustrates that

• A)an increase in investment spending will be multiplied into a larger increase in GDP.
• B)an increase in GDP will be multiplied into a larger amount of investment spending.
• C)an increase in GDP will be multiplied into a larger increase in consumer spending.
• D)investment spending is always a multiple of consumer spending.

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Definitions:

User Cost

The opportunity cost of using a good, service, or resource, including the cost of foregoing the next best alternative use.

Extraction Cost Curve

Illustrates the relationship between the quantity of a resource extracted and the cost of extraction, typically showing increasing costs as more of the resource is extracted.

Marginal Extraction Costs

The additional costs incurred for extracting one more unit of a resource, which may increase as the resource becomes scarcer.

Resource

Assets, materials, or substances that provide economic value or benefit to individuals or businesses.