The multiplier effect relates
A)changes in the price level to changes in real GDP.
B)changes in the interest rate to changes in investment.
C)changes in disposable income to changes in consumption.
D)changes in spending to changes in real GDP.

Question

Quizplus · Accepted Answer

The multiplier effect refers to the process by which an initial change in spending (such as investment or government spending) leads to a larger change in real GDP, as the initial spending circulates through the economy and generates additional income and consumption.

The Multiplier Effect Relates