The multiplier effect represents Keynes’s insight that: (a) households would rather spend than save. (b) businesses prefer to be in the expansion phase of the business cycle. (c) an increase in spending will increase equilibrium income by more than the initial increase in spending. (d) an increase in equilibrium income will increase the marginal propensity to consume.

The multiplier effect represents Keynes’s insight that: (a) households would rather spend than save. (b) businesses prefer to be in the expansion phase of the business cycle. (c) an increase in spending will increase equilibrium income by more than the initial increase in spending. (d) an increase in equilibrium income will increase the marginal propensity to consume.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Kenesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 15QP

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