The Multiplier Effect Means That

question 177

Multiple Choice

The multiplier effect means that:

• A)consumption is typically several times as large as saving.
• B)a small change in consumption demand can cause a much larger increase in investment.
• C)a small decline in the MPC can cause equilibrium GDP to rise by several times that amount.
• D)a small increase in investment can cause national income to change by a larger amount.

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Definitions:

Direct Labor-Hours

Direct labor-hours refer to the total hours worked by employees directly involved in producing a product.

Spending Variance

The difference between the budgeted amount of spending and the actual amount spent.

Actual Cost

The real, total expenses incurred for a project or production, including all direct and indirect costs.

Plane Operating Costs

The expenses associated with the operation of an aircraft, including fuel, maintenance, crew salaries, and depreciation.