As the MPC Gets Close to 1,the Value of the Multiplier

question 57

Multiple Choice

As the MPC gets close to 1,the value of the multiplier approaches

• A)0.
• B)1.
• C)infinity.
• D)None of the above is correct.

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Definitions:

Base Year

A specific year against which economic growth, inflation, and other economic indicators are measured to assess changes over time.

Real GDP

Gross Domestic Product adjusted for inflation, providing a more accurate reflection of an economy's size and growth by measuring the value of goods and services produced.

Real GDP

Gross Domestic Product after adjustments for inflation; measures the value of all goods and services produced within a country's borders in a specific time period using constant prices.

Deflation

A decrease in the general price level of goods and services, often leading to an increase in the real value of money.