The Actual Multiplier Effect in the U

question 39

Multiple Choice

The actual multiplier effect in the U.S. economy is less than the multiplier effect in the text examples because

• A) the real-world MPS is larger than the MPS in the examples.
• B) in addition to saving, households use some of any increase in income to buy imported goods and to pay additional taxes.
• C) the gap between the nominal interest rate and the real interest rate widens as the economy expands or contracts.
• D) the MPC in the United States is greater than 1.

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Definitions:

Average Starting Salary

The mean initial compensation received by employees in their new positions across a specific sector or within a company.

Standard Deviation

is a measure of the amount of variability or spread in a set of data.

Normally Distributed

This describes a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Average Balance

The mean value derived from summing all balances over a certain period and dividing by the number of periods.