assume there is a multiplier effect, some crowding out, and no accelerator effect. an increase in government expenditures changes aggregate demand more, a. the larger the mpc and the stronger the influence of income on money demand. b. the smaller the mpc and the weaker the influence of income on money demand. c. the smaller the mpc and the stronger the influence of income on money demand.

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04-11-2022
Business

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assume there is a multiplier effect, some crowding out, and no accelerator effect. an increase in government expenditures changes aggregate demand more, a. the larger the mpc and the stronger the influence of income on money demand. b. the smaller the mpc and the weaker the influence of income on money demand. c. the smaller the mpc and the stronger the influence of income on money demand.

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smecloudbird18 smecloudbird18 · Answer 1 · 2022-11-12T23:56:09-05:00

The larger the MPC and the stronger the influence of income on money demand. The accelerator effect occurs when an increase in GDP causes capital investment spending to rise proportionately faster.

In other words, when an economy is income growing extremely fast, businesses frequently experience a rise in capital spending. An increase in the rate of growth of consumer demand results in an increase in enterprises' anticipated capital investments, which is known as a positive accelerator impact. For instance, increasing streaming service demand can prompt companies like Netflix and Disney+ to invest more in server infrastructure. According to the accelerator effect.

To learn more about accelerator effect, click here.

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