The magnification of small changes in spending into larger changes in output and income is produced by:
A) the average propensity to consume.
B) the average propensity to save.
C) the multiplier effect.
D) saving.

Question

Quizplus · Accepted Answer

The multiplier effect refers to the process by which an initial change in spending leads to a larger change in output and income in the economy.

The Magnification of Small Changes in Spending into Larger Changes