The multiplier means that an increase in investment results in ________ aggregate expenditure that is ________ the increase in investment.
A)decreased;larger than
B)increased;smaller than
C)decreased;smaller than
D)increased;larger than
E)increased;the same size as

Question

Quizplus · Accepted Answer

The multiplier effect is based on the idea that an increase in investment leads to a multiplication of the effect on aggregate expenditure. This means that the increase in aggregate expenditure resulting from the increase in investment will be greater than the initial increase in investment itself. Therefore, the correct choice is (D) increased; larger than.

The Multiplier Means That an Increase in Investment Results in ________