Answer to Question #182264 in Macroeconomics for Delanie

Question

The multiplier effect means that

A. consumption is typically several times as large as saving.

B. a small change in consumption can cause a much bigger increase in investment.

C. a small decline in the MPC can cause equilibrium GDP to rise by several times that amount.

D. a small increase in investment can cause a GDP to change by a larger amount.

Answer 1

$D$