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AE Model and the Multiplier
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AE Model and the Multiplier
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16. Deriving the Aggregate Expenditures Model / AE Model and the Multiplier / Problem 7
Problem 7
Why is the multiplier effect significant in economic policy decisions?
A
It allows policymakers to predict the impact of spending changes on GDP.
B
It is irrelevant to economic policy decisions.
C
It is used to measure inflation.
D
It helps in determining tax rates.
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