The multiplier means that an increase in investment results in ________ aggregate expenditure that is ________ the increase in investment.
A) increase; larger than
B) increase; the same size as
C) increase; smaller than
D) decrease; larger than
E) decrease; smaller than

Question

Quizplus · Accepted Answer

The multiplier effect implies that an initial increase in investment leads to a larger increase in aggregate expenditure due to the subsequent rounds of spending it generates in the economy.

The Multiplier Means That an Increase in Investment Results in ________