An Increase in the MPC

question 73

Multiple Choice

An increase in the MPC

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

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Definitions:

OPEC

The Organization of the Petroleum Exporting Countries, a group of oil-producing nations that aims to manage the supply of oil to stabilize oil market prices and ensure efficient, economic and regular supply to consumers.

Oil Production

The process of extracting crude oil from the earth and preparing it for sale, including exploration, drilling, and refining.

Favorable Supply Shock

An unexpected event that increases the supply of goods or services, typically leading to lower prices for those goods or services.

Short-run Phillips Curve

A concept in economics that illustrates an inverse relationship between inflation and unemployment within a certain period, implying that lower unemployment in the short run can come with higher levels of inflation.