The multiplier effect shows that a change in aggregate spending:
A) will cause output to move in the opposite direction.
B) causes output to change even more than the change in aggregate spending.
C) causes output to change by something less than the change in aggregate spending.
D) leaves output unaffected.

Question

Quizplus · Accepted Answer

The multiplier effect indicates that an initial change in aggregate spending leads to a larger change in overall output, as the initial spending circulates through the economy, creating additional income and further spending.

The Multiplier Effect Shows That a Change in Aggregate Spending