Multiple Choice
The reason that an increase in autonomous spending leads to an even greater increase in equilibrium level of output is that
A) as firms increase output to meet demand, income increases, and this induces more consumption spending
B) the multiplier increases with an increase in autonomous spending
C) prices rise with increased output and this raises nominal GDP
D) people save less as their income increases
E) there is unwanted inventory accumulation, leading firms to lower prices and encouraging increased consumer spending
Correct Answer:

Verified
Correct Answer:
Verified
Q32: Assume a model with an income tax
Q33: The size of the expenditure multiplier<br>A)changes with
Q34: In a model with income taxes, assume
Q35: In a model with income taxes, an
Q36: In a model with income taxes, if
Q38: If there is no government or foreign
Q39: Total autonomous spending<br>A)is dependent on the level
Q40: The expenditure multiplier measures<br>A)the number of steps
Q41: A decrease in the income tax rate
Q42: When calculating the multiplier for government purchases