Multipliers amplify an initial shock.When do multiplier effects take place?
A) During recessions only
B) During expansions only
C) During both recessions and expansions
D) During both recessions and expansions, but only if the economy is not at full employment

Question

Quizplus · Accepted Answer

Multiplier effects can take place both during recessions and expansions, as long as the initial shock influences aggregate demand. It is not limited to any particular phase of the business cycle.

Multipliers Amplify an Initial Shock