The Multiplier Effect

question 87

Multiple Choice

The multiplier effect

• A)and the crowding-out effect both amplify the effects of an increase in government expenditures.
• B)and the crowding-out effect both diminish the effects of an increase in government expenditures.
• C)diminishes the effects of an increase in government expenditures,while the crowding-out effect amplifies the effects.
• D)amplifies the effects of an increase in government expenditures,while the crowding-out effect diminishes the effects.

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Definitions:

Compounded Monthly

Relates to interest that is calculated on a loan or investment twelve times a year.

Interest

The cost of borrowing money, typically expressed as a percentage of the principal, or the gain from lending money.

Loan

A sum of money borrowed from a lender that is expected to be paid back with interest.

Compounded Quarterly

Describes interest on a loan or investment calculated four times a year.