ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the point of the multiplier?
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It helps to see the ripple effect a change in spending or saving has
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It helps to see how much more money we can make if we save $1
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It helps to see how much more money we lose if we save $1
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It helps to see how much more money the government makes
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Explanation:
Detailed explanation-1: -The multiplier effect refers to the effect on national income and product of an exogenous increase in demand. For example, suppose that investment demand increases by one. Firms then produce to meet this demand. That the national product has increased means that the national income has increased.
Detailed explanation-2: -The multiplier effect is a concept in economics that describes how an injection into an economy, such as an increase in government spending, creates a ripple effect which increases employment and the output of goods and services in the economy.
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