Which of the Following Is a True Statement About the Multiplier

question 14

Multiple Choice

Which of the following is a true statement about the multiplier?

• A)The formula for the multiplier overstates the real world multiplier when we take into account the impact of changes in GDP on imports,inflation and the interest rate.
• B)The larger the MPC,the smaller the multiplier.
• C)The multiplier is the ratio of the change in spending to the change in GDP.
• D)The multiplier makes the economy less sensitive to changes in autonomous expenditure.

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Definitions:

Distribution

The process by which goods or services are made available and dispersed to a wide audience or market.

Interaction

The process by which two or more entities communicate or influence each other.

Dignity

The state or quality of being worthy of honor or respect, often considered an inherent attribute of all human beings.

Personal Humility

A trait describing individuals who possess a low self-focus and prioritize the needs of others without seeking personal recognition.