OCR Eco: Chap 13 Multiplier Accelerator

Which of the following factors does NOT determine the size of the national income multiplier?

• Marginal Propensity to Consume (MPC)

• Marginal Propensity to Save (MPS)

• Marginal Propensity to Withdraw (MPW)

• Marginal Propensity to Invest (MPI)

Which of the following statements is true about the multiplier effect?

• It leads to a larger change in national income from an initial change in spending.

• It reduces the national income due to increased taxation.

• It has no impact on the overall economy.

• It decreases the investment spending in the economy.

If the MPC is 0.8, what is the value of the multiplier?

• 5

• 4

• 6

• 3

What does the accelerator effect explain?

• How changes in aggregate demand influence investment spending

• How changes in taxes influence investment spending

• How changes in exports influence investment spending

• How changes in imports influence investment spending

What does Average Propensity to Save (APS) represent?

• The proportion of total income that is spent rather than saved.

• The proportion of total income that is saved rather than spent.

• The sum of the average propensities to save, tax, and import.

• The general increase in prices and fall in the purchasing value of money.

What characterizes Economic Instability?

• The general increase in prices and fall in the purchasing value of money.

• The general decrease in prices and increase in the purchasing value of money.

• The condition of an economy characterized by imbalances between demand and supply.

• The proportion of total income that is saved rather than spent.

Which term describes the proportion of total income that is saved rather than spent?

• Average Propensity to Withdraw (APW)

• Inflation

• Average Propensity to Save (APS)

• Deflation

What is an output gap in an economy?

What does the accelerator effect explain?

• How changes in aggregate demand can influence investment spending.

• How changes in interest rates affect savings.

• The relationship between inflation and unemployment.

• The impact of government policies on trade balances.

What are the consequences of a negative output gap?

• Unemployment.

• Inflation.

• Increased consumer spending.

• Higher interest rates.