A change in any component of aggregate demand creates a larger change in overall aggregate demand.This is the ________ effect,and it means,for example,that a(n)________ in consumption will cause an even larger ________ in AD.
A)liquidity;increase;increase
B)liquidity;decrease;decrease
C)multiplier;decrease;decrease
D)growth;increase;decrease
E)multiplier;decrease;increase

Question

Quizplus · Accepted Answer

The multiplier effect refers to the phenomenon where a change in a component of aggregate demand, such as consumption, leads to a more than proportional change in overall aggregate demand. A decrease in consumption will cause an even larger decrease in aggregate demand.

A Change in Any Component of Aggregate Demand Creates a Larger