Which of the Following Helps Explain the Multiplier Effect

question 139

Multiple Choice

Which of the following helps explain the multiplier effect?

• A) Income is spent and re-spent in the circular flow model.
• B) People buy a lot of luxury items.
• C) Incomes tend to increase with inflation.
• D) Banks only hold a fraction of their deposits on reserve.

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Definitions:

Biogeochemical Cycle

A natural process involving the circulation and transformation of chemicals in the Earth's ecosystems.

Food Webs

Complex networks of predators and prey showing the feeding relationships between organisms within an ecosystem.

Carbon Cycle

The series of processes by which carbon compounds are interconverted in the environment, chiefly involving the incorporation of carbon dioxide into living tissue by photosynthesis and its return to the atmosphere through respiration, decay of organisms, and the burning of fossil fuels.

Trophic Levels

The levels in an ecosystem, representing a step in the food chain or food web, characterized by organisms that share the same function in the food chain and the same nutritional relationship to the primary sources of energy.