Which of the Following Is an Example of the Multiplier

question 34

Multiple Choice

Which of the following is an example of the multiplier at work as a result of an increase in consumption expenditures?

• A)Consumers compete with the government by increasing their expenditures,causing businesses to increase their investments to satisfy the increased demand.
• B)Consumption expenditures increase inflation,which reduces real incomes;consumer expenditures and investment decline,which reduces aggregate spending.
• C)Households and businesses receive income from consumption expenditures;they spend a portion of this new income;these expenditures,in turn,generate income for other businesses and households,which in turn spend a portion of the new income,and so on.
• D)Consumption expenditures stimulate investment in new plants and equipment to produce goods and services for the government,which provides fewer jobs and decreases incomes.

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Definitions:

Air Pressure Regulator

A device that maintains a constant output air pressure regardless of variations in input pressure and flow requirements.

Pneumatics

The technology or method of using pressurized air to effect mechanical motion or control systems.

RoadRanger

A range of heavy-duty manual transmissions found in large trucks, known for their durability and performance.