All of the following are true statements about the multiplier except
A) The formula for the multiplier overstates the real world multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate.
B) The larger the MPC, the larger the multiplier.
C) The multiplier is the ratio of the change in real GDP to the change in autonomous expenditure.
D) The multiplier makes the economy less sensitive to changes in autonomous expenditure.
D) The multiplier makes the economy less sensitive to changes in autonomous expenditure.
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If the MPC equals 0.80 then:
a. the MPS equals 1.20. b. the multiplier equals 0.20. c. the multiplier equals 1 divided by 0.80. d. the multiplier equals 5. e. none of these.
A major macroeconomic leakage from the circular flow is:
a. Saving b. Gross private domestic investment c. Government spending. d. All of the above. e. None of the above.