What Decreases the Size of the Multiplier Effect

question 169

Multiple Choice

What decreases the size of the multiplier effect?

• A) Consumers buy fewer imports.
• B) Consumers save less and spend more.
• C) Income tax rates decrease.
• D) Consumers save more and spend less.
• E) Businesses invest more.

---

Definitions:

Interest Expense

The amount an entity pays over time for the use of borrowed funds.

General Journal Entry

A general journal entry is a record of financial transactions in the accounting records of a business.

Notes Payable

This refers to a written promise to pay a certain amount of money, usually including interest, by a specific date, and is recognized as a liability on a company's balance sheet.

Effective Interest Method

An accounting practice used to allocate loan or bond interest expense over the life of the loan or bond based on the loan's amortized cost.