The income-expenditure multiplier leads to greater than one-for-one changes in output when autonomous spending changes because:
A. autonomous spending supports more output than induced spending.
B. multiple deposits are generated when new reserves are produced through fractional reserve banking.
C. planned changes in inventories signal producers to adjust the level of output.
D. the direct changes in spending change the income of producers which leads to additional changes in spending.
Answer: D
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Regulation is guaranteed to be more efficient than a monopoly
A) True, the government is able to internalize the dead weight loss of the monopoly. B) True, the consumers are better off if government provides the product rather than a private firm. C) False, the government does not always have sufficient information to provide a more efficient market outcome. D) False, the consumers are worse off under government regulation.
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