Which of the Following Best Defines the Multiplier Effect

question 118

Multiple Choice

Which of the following best defines the multiplier effect?

• A) the multiplied impact on the money supply of a given increase in government purchases
• B) the multiplied impact on tax revenues of a given increase in government purchases
• C) the multiplied impact on investment of a given increase in interest rates
• D) the multiplied impact on aggregate demand of a given increase in government purchases

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Definitions:

Expected Utility

A theory in economics that calculates the utility of an outcome based on its probability and the utility of the outcomes.

Income

The monetary payment received for goods or services, or profit from investments, typically calculated on a regular basis like annually or monthly.

Expected Utility Function

A mathematical expression that represents an individual's preferences over a set of outcomes, incorporating the probabilities of those outcomes.

Sure Payment

A guaranteed payment or financial transaction that is certain to occur.