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Multiplier Effect of Investment Spending
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Problem 10
Multiplier Effect of Investment Spending
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15. Income and Consumption / Multiplier Effect of Investment Spending / Problem 6
Problem 6
How does an increase in investment spending lead to a chain reaction of increased consumer spending?
A
Increased investment spending has no effect on consumer spending.
B
Increased investment spending directly increases government spending, not consumer spending.
C
Increased investment spending raises household incomes, leading to higher consumer spending.
D
Increased investment spending decreases household incomes, leading to lower consumer spending.
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