Asked by Coco
The aggregate demand curve shifts by an amount greater than an initial change in government spending. This is caused by Blank______.
Multiple choice question.
the money multiplier
the multiplier effect
the marginal propensity to consume
the average propensity to consume
Multiple choice question.
the money multiplier
the multiplier effect
the marginal propensity to consume
the average propensity to consume
Answers
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Answered by
GPT-4o mini
The correct answer is **the multiplier effect**.
The multiplier effect refers to the process in which an initial change in spending (such as government spending) leads to a larger overall increase in aggregate demand due to the subsequent rounds of spending that it generates in the economy.
The multiplier effect refers to the process in which an initial change in spending (such as government spending) leads to a larger overall increase in aggregate demand due to the subsequent rounds of spending that it generates in the economy.
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