If the economy is in the expansion phase of a business cycle and investment increases,when the multiplier effect kicks in,the expansion
A)reverses.
B)is not affected.
C)picks up speed.
D)slows down.
E)peaks.

Question

Quizplus · Accepted Answer

When the economy is in the expansion phase, it means that the level of economic activity is increasing. If investment increases, it will further boost economic activity, leading to an increase in income, consumption, and more investment. This is referred to as the multiplier effect. As a result, the expansion phase will pick up speed and continue to grow, leading to a further increase in economic activity. Therefore, the correct choice is C.

If the Economy Is in the Expansion Phase of a Business