Question

The spending-income multiplier

a. magnifies spending-income changes into smaller changes in aggregate demand, causing demand-pull inflation.
b. magnifies spending-income changes into greater changes in aggregate demand, causing demand-pull inflation.
c. reduces spending-income changes into larger changes in aggregate supply, causing cost-push inflation.
d. reduces spending-income changes into smaller changes in aggregate supply, causing demand-push inflation.

Answer 1

Answer: magnifies spending-income changes into greater changes in aggregate demand, causing demand-pull inflation

Step-by-step explanation:

The spending multiplier is the ratio of the change in GDP to the change in the autonomous expenditure.

The spending income multiplier magnifies spending-income changes into greater changes in aggregate demand, causing demand-pull inflation. In a situation whereby there's a reduction in the investment spending, there'll be a recession.