Understanding the Multiplier Effect

Understanding the Multiplier Effect

12th Grade

10 Qs

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Understanding the Multiplier Effect

Understanding the Multiplier Effect

Assessment

Quiz

Social Studies

12th Grade

Practice Problem

Medium

Created by

Rebecca Miah

Used 1+ times

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10 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the multiplier effect in economics?

A theory about consumer behavior

A method to calculate interest rates

A concept explaining the greater final impact on national income from an initial change in aggregate demand

A measure of inflation

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How is the multiplier coefficient calculated?

Final change in real GDP + Initial change in AD

Initial change in AD - Final change in real GDP

Final change in real GDP / Initial change in AD

Initial change in AD / Final change in real GDP

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is an example of an initial injection into the circular flow?

A reduction in government spending

A decrease in consumer savings

A rise in exports

An increase in taxes

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What happens during a negative multiplier effect?

An initial withdrawal leads to a smaller drop in GDP

An initial injection leads to a larger increase in GDP

An initial withdrawal leads to a larger drop in GDP

An initial injection has no effect on GDP

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT a factor that can cause an initial injection?

Consumer savings

Exports

Investment

Government spending

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the effect of one agent’s spending in the multiplier effect?

It reduces aggregate demand

It leads to inflation

It becomes another agent’s income

It decreases the national income

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following best describes the circular flow of income?

The flow of money between banks and the government

The flow of goods and services in the economy

The flow of income and spending between different sectors of the economy

The flow of imports and exports

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