An increase in nonincome-determined spending leads to:
A) no change in the level of economic activity.
B) a decrease in income-determined spending.
C) an increase in the level of economic activity that is less than the increase in nonincome-determined spending.
D) an increase in the level of economic activity that is greater than the increase in nonincome-determined spending.

Question

Quizplus · Accepted Answer

An increase in nonincome-determined spending, such as government spending or investment, typically leads to a multiplier effect in the economy. This means that the initial increase in spending leads to further increases in income and consumption, resulting in an overall increase in the level of economic activity that is greater than the initial increase in spending.

An Increase in Nonincome-Determined Spending Leads To