How Does the Multiplier Change When the MPC Increases, and What

question 45

Multiple Choice

How does the multiplier change when the MPC increases, and what is the effect on aggregate demand?

• A) Higher MPC increases the multiplier so that changes in government expenditures have a larger effect on aggregate demand.
• B) Higher MPC increases the multiplier so that changes in government expenditures have a smaller effect on aggregate demand.
• C) Higher MPC decreases the multiplier so that changes in government expenditures have a larger effect on aggregate demand.
• D) Higher MPC decreases the multiplier so that changes in government expenditures have a smaller effect on aggregate demand.

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Definitions:

Sample Size

Denotes the number of subjects or units chosen from a population for the purpose of statistical analysis.

Accuracy

The degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.

Standard Time

A predetermined or established duration for performing a task, used for planning, scheduling, and evaluating work efficiency.

Normal Time

usually refers to the standard duration allocated to complete a task or process under typical conditions.