In the multiplier process, an increase in spending
A) causes a decrease in production and incomes, which leads to a further decrease in spending.
B) causes an increase in prices and wages, which causes a further increase in spending.
C) causes an increase in production and incomes, which leads to a decrease in spending.
D) causes an increase in production and incomes, which leads to a further increase in spending.

Question

Quizplus · Accepted Answer

The multiplier process in economics suggests that an initial increase in spending leads to a series of increases in production and incomes, which in turn leads to further increases in spending. This cycle continues, amplifying the initial increase in spending throughout the economy.

In the Multiplier Process, an Increase in Spending