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Questions and Answers
- What is the multiplier effect in economics?
- What is the multiplier effect in economics?
- a. A decrease in overall economic activity
- b. An increase in overall economic activity (correct)
- c. The stabilization of prices
- d. The reduction of government spending
- The multiplier effect is based on the idea that:
- The multiplier effect is based on the idea that:
- a. Consumer spending is constant (correct)
- b. Government spending has no impact on the economy
- c. Changes in spending have a magnified impact on overall economic activity
- d. Investment spending is always negative
- The formula for the simple multiplier is
- The formula for the simple multiplier is
- a. Multiplier = 1 / (1 - MPC) (correct)
- b. Multiplier = 1 + MPC
- c. Multiplier = 1 / MPC
- d. Multiplier = MPC / 1
- If the marginal propensity to consume (MPC) is 0.8, what is the value of the multiplier?
- If the marginal propensity to consume (MPC) is 0.8, what is the value of the multiplier?
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- The multiplier effect leads to a larger change in
- The multiplier effect leads to a larger change in
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- If the initial increase in spending is $1,000 and the multiplier is 4, what will be the total increase in income?
- If the initial increase in spending is $1,000 and the multiplier is 4, what will be the total increase in income?
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- The multiplier effect is more significant when
- The multiplier effect is more significant when
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- Which of the following is not a factor that influences the size of the multiplier?
- Which of the following is not a factor that influences the size of the multiplier?
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- If the marginal propensity to consume (MPC) is 0.9, what is the value of the multiplier?
- If the marginal propensity to consume (MPC) is 0.9, what is the value of the multiplier?
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- The multiplier effect can amplify the impact of a change in
- The multiplier effect can amplify the impact of a change in
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- If the marginal propensity to consume (MPC) is 0.75, what is the value of the multiplier?
- If the marginal propensity to consume (MPC) is 0.75, what is the value of the multiplier?
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- The multiplier effect is a concept closely related to
- The multiplier effect is a concept closely related to
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- If the initial increase in investment is $500 and the multiplier is 2, what will be the total increase in income?
- If the initial increase in investment is $500 and the multiplier is 2, what will be the total increase in income?
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- The multiplier effect tends to stabilize the economy by
- The multiplier effect tends to stabilize the economy by
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- If the marginal propensity to consume (MPC) is 0.6, what is the value of the tax multiplier?
- If the marginal propensity to consume (MPC) is 0.6, what is the value of the tax multiplier?
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- If the initial increase in taxes is $800 and the tax multiplier is 5, what will be the total change in income?
- If the initial increase in taxes is $800 and the tax multiplier is 5, what will be the total change in income?
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- If the marginal propensity to consume (MPC) is 0.5 and government spending decreased by $100. what is the total change in income?
- If the marginal propensity to consume (MPC) is 0.5 and government spending decreased by $100. what is the total change in income?
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