The less inventories firms hold, the larger the multiplier.

Name: The less inventories firms hold, the larger the multiplier.
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Less inventories mean that firms are producing goods on demand, which increases the production multiplier as every dollar spent on production leads to more spending in the economy. This is because a larger portion of the spending goes towards paying wages and buying materials for production, which in turn creates more income and spending.

The Less Inventories Firms Hold, the Larger the Multiplier