How Does the Multiplier Change When the MPC Increases, and What

question 45

Multiple Choice

How does the multiplier change when the MPC increases, and what is the effect on aggregate demand?

• A) Higher MPC increases the multiplier so that changes in government expenditures have a larger effect on aggregate demand.
• B) Higher MPC increases the multiplier so that changes in government expenditures have a smaller effect on aggregate demand.
• C) Higher MPC decreases the multiplier so that changes in government expenditures have a larger effect on aggregate demand.
• D) Higher MPC decreases the multiplier so that changes in government expenditures have a smaller effect on aggregate demand.

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Definitions:

Durham Test

A legal test for insanity that holds people to be insane at the time they committed a crime if their act was the result of a mental disorder or defect.

American Law Institute Test

A legal test for insanity that holds people to be insane at the time of committing a crime if, because of a mental disorder, they did not know right from wrong or could not resist an uncontrollable impulse to act.

M'Naghten Rule

A standard for determining the insanity of a defendant in a criminal case, based on their ability to understand the nature of their act or distinguish right from wrong.

Diagnosis

The process of identifying a disease or condition from its signs and symptoms through various assessments and tests.