The core insight of the multiplier is that: A. households would rather spend than save. B. businesses prefer to be in the expansion phase of the business cycle. C. an increase in spending will increase equilibrium income by more than the initial increase in spending. D. an increase in equilibrium income will increase the marginal propensity to consume.
Added by Christina C.
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This is because when one person or entity spends money, the recipient of that money will then spend some of it, and so on, creating a ripple effect of increased economic activity. Show more…
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