If the Investment Accelerator from an Increase in Government Purchases

question 12

Multiple Choice

If the investment accelerator from an increase in government purchases is larger than the crowding-out effect,then

• A)the multiplier is probably zero.
• B)the multiplier is probably equal to one.
• C)the multiplier is probably greater than one.
• D)the multiplier is probably less than one.

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Definitions:

Actual Output

Refers to the real or achieved results or outcome of a process, which can be compared to expected or intended outputs.

Potential Output

Potential output is the maximum amount of goods and services an economy can produce when it fully uses its available resources.

Köhler Effect

A phenomenon in social psychology where less capable members of a group are motivated to increase their effort on a task to match the performance levels of more capable members.

Productive Individuals

People who are consistently able to achieve high output within the expected timeframes, contributing significantly to their teams or projects.