Which of the Following Is a True Statement About the Multiplier

question 14

Multiple Choice

Which of the following is a true statement about the multiplier?

• A)The formula for the multiplier overstates the real world multiplier when we take into account the impact of changes in GDP on imports,inflation and the interest rate.
• B)The larger the MPC,the smaller the multiplier.
• C)The multiplier is the ratio of the change in spending to the change in GDP.
• D)The multiplier makes the economy less sensitive to changes in autonomous expenditure.

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Definitions:

Flat Affect

A condition characterized by a severe reduction in emotional expressiveness, often seen in schizophrenia and depression.

Little Emotion

Experiencing or expressing minimal emotional responses, which could be indicative of certain personality traits or psychological states.

Condition

A specific state of being or existence, often referring to circumstances, health status, or external situations affecting entities or events.

Dopamine

A neurotransmitter involved in many functions, including motivation, reward, attention, and regulating movements.