Question 50
MediumOriginal questionRead the two statements and choose the correct option.
I. In the multiplier process, one person's spending becomes another person's income.
II. In the multiplier process, the rounds of new income get larger and larger.
Show the answer and explanation
CorrectNot quiteAnswer A
Correct answer: A
Explanation
That chain of spending and income is the mechanism. I is true.
Each round is MPC times the last, so the rounds shrink. II is false.
- Concept
- Mechanism of the multiplier
- Typical timeTypical
- 70 s
- Your timeYours
- —
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