Which Event Has a Multiplier Effect and Increases Aggregate Demand

question 92

Multiple Choice

Which event has a multiplier effect and increases aggregate demand?

• A) increase in saving
• B) increase in exports
• C) decrease in investment
• D) increase in taxes
• E) decrease in exports

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Definitions:

Absolute Advantage

The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources.

Lower Cost

A situation where there is a reduction in the total expense required to produce goods or services.

Exchange Rate

The exchange rate determining the worth of one currency in a different currency.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others, leading to specialized production and trade benefits.