The Income-Expenditure Multiplier Leads to Greater Than One-For-One Changes in Output

question 130

Multiple Choice

The income-expenditure multiplier leads to greater than one-for-one changes in output when autonomous spending changes because:

• A)the direct changes in spending change the income of producers which leads to additional changes in spending.
• B)multiple deposits are generated when new reserves are produced through fractional reserve banking.
• C)autonomous spending supports more output than induced spending.
• D)planned changes in inventories signal producers to adjust the level of output.

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Definitions:

Chase Strategy

A demand-driven production strategy where production rates are adjusted to match demand to minimize inventory costs.

Flexibility Strategy

An approach to operations and decision-making that emphasizes the ability to adapt to changes, respond to unpredicted demands, or capitalize on new opportunities.

Level Strategy

A business approach that maintains a steady production rate and workforce level, even during fluctuating demand periods.

Aggregate Planning

A methodology in operations management aimed at determining optimal production, workforce levels, and inventory levels, to meet forecasting demand over a medium-range period.