The multiplier effect indicates that:
A)a decline in the interest rate will cause a proportionately larger increase in investment.
B)a change in spending will change aggregate income by a larger amount.
C)a change in spending will increase aggregate income by the same amount.
D)an increase in total income will generate a larger change in aggregate expenditures.
Answer:B
The multiplier effect indicates that:
A)a decline in the interest rate will cause a proportionately larger increase in investment. B)a change in spending will change aggregate income by a larger amount. C)a change in spending will increase aggregate income by the same amount. D)an increase in total income will generate a larger change in aggregate expenditures.