The multiplier effect would NOT be initiated by an increase in:
A) business investment spending.
B) foreign purchases of U.S. exports.
C) household income-determined spending.
D) government purchase of goods and services.

Question

Quizplus · Accepted Answer

The multiplier effect is initiated by an initial change in spending, leading to further rounds of spending and income generation. An increase in household income-determined spending is essentially the result of the multiplier effect, not an initiator of it. Increases in business investment, foreign purchases of U.S. exports, and government purchases directly inject new spending into the economy, initiating the multiplier effect.

The Multiplier Effect Would NOT Be Initiated by an Increase