Which of the following is INCORRECT ? A) The multiplier dampens the increase in income that occurs during expansions and brings the economy to a new equilibrium GDP. B) Firms increase production in response to unplanned decreases in inventories. C) Firms experience unplanned decreases in inventories as expansions begin. D) Expansions usually begin with an increase in autonomous spending.

Question

Quizplus · Accepted Answer

The multiplier effect amplifies the increase in income during expansions, rather than dampening it, leading to a larger change in equilibrium GDP.

Which of the Following Is INCORRECT