Option (b) for a response. In order to keep the expenditure multiplier from exceeding 1, output must increase while consumption must decrease.
<h3>Spending multiplier: What does it tell you?</h3>
An economic indicator of the impact that changes in government spending and investment have on a nation's Gross Domestic Product is the expenditure multiplier, often known as the fiscal multiplier.
<h3>When the multiplier is negative, what does that mean?</h3>
The negative multiplier effect happens when a spending leak or initial withdrawal from the circular flow has further impacts and a larger final decline in real GDP.
<h3>Why does multiplier exceed 1?</h3>
The rise in the national product indicates a rise in national income. Consumption demand rises as a result, and businesses produce to satisfy it. As a result, the increase in investment is greater than the increase in national income and product. There is a multiplier effect that exceeds one.
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Answer:
(i) They are readily understood even by those unaccustomed to reading charts or those who are not chart-minded.
(ii) They posses the outstanding advantage that they are the simplest and the easiest to make.
(iii) When a large number of items are to be compared they are the only form that can be used effectively.
Answer:
He will sell 600 pizzas per week if he cuts the price by 10%.
Explanation:
Price Elasticity of demand measure the responsiveness of demand to change in the price of a product. It calculates the ratio of change in demand and change in price.
Price elasticity of demand = % change in demand / % change in price
-2 = % change in demand / 10%
% Change in in demand = -2 x 10%
% Change in in demand = -20%
Following the law of demand as price decreases the demand of the product increases. So the sale of Pizzas will be increased by 20%.
Current Sale of Pizzas = 500 pizzas
Increase in sales = 500 x 20% = 100 pizzas
Increased sale = 500 + 100 = 600 pizzas
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