The multiplier effect exists because:
A)production and expenditures are interdependent.
B)when one person increases expenditures, everyone decreases expenditures.
C)production and expenditures are independent.
D)production lowers expenditures.

Question

Quizplus · Accepted Answer

The multiplier effect exists because production and expenditures are interdependent, meaning that an increase in spending leads to an increase in production, which in turn leads to more income and further spending, amplifying the initial increase in economic activity.

The Multiplier Effect Exists Because