All of the Following Are True Statements About the Multiplier

question 270

Multiple Choice

All of the following are true statements about the multiplier except:

• 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 larger the multiplier.
• C)The multiplier is the ratio of the change in real GDP to the change in autonomous expenditure.
• D)The multiplier makes the economy less sensitive to changes in autonomous expenditure.

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