Multiple Choice Questions on The intutive reason that the multiplier works is thatThe intutive reason that the multiplier works i........... for SEBI Grade A ( Officer) Exam Preparation

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Multiple Choice Questions

The intutive reason that the multiplier works is thatThe intutive reason that the multiplier works i...........

Economics- Phase (I & II) Multiplier and Accelerator 
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    The intutive reason that the multiplier works is thatThe intutive reason that the multiplier works is that

    government is the only force with power large enough to change equilibrium output.

    Incorrect Answer

    an initial change in autonomous Aggregate Demand leads to more output, which gives consumers more income, a portion of which they spend, thus increasing output and income even more

    Correct Answer

    an initial change in Aggregate Demand leads to an equal and offsetting change in Aggregate Supply.

    Incorrect Answer

    an initial change in Aggregate Demand leads to higher levels of income, which are then saved.

    Incorrect Answer
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    Explanation:

    The key to understanding the multiplier is income-induced consumption.

    By: Jyoti Das
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