Author Question: If it becomes less expensive for firms to hold excess capital and labor, the multiplier will (Read 81 times)

dbose · **on:** Apr 19, 2019

Question 1

Suppose that the value of the multiplier has decreased in recent years. Which of the following could have caused this?

◦ Consumption has become less sensitive to changes in the interest rate.
◦ The costs of inventory storage have risen.
◦ Changes in the way the unemployment compensation fund is financed have made it less expensive for firms to lay off workers.
◦ There has been an increase in the demand for imported goods.

Question 2

If it becomes less expensive for firms to hold excess capital and labor, the multiplier will

◦ decrease.
◦ remain unchanged.
◦ increase.
◦ either increase or decrease depending on the value of the
MPC.

Koolkid240 · **Reply #1 on:** Apr 19, 2019

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