Question 16(1 point)

Which of the following statements is true regarding factors that contribute to the volatility of investment?

a

Expectationsof future business conditions are easily and quickly changed.

b

Technological innovationoccurs irregularly and often unexpectedly.

c

Profitsaffect both the incentive and ability to invest, and profits vary considerably from year-to-year.

d

All of the above.

e

Only a) and b)

Question 17(1 point)

Which of the following statements is true?

a

Normally, changes in spending ripple through the economy to generateeven larger changes in real GDP. This is called thespending multiplier effect.

b

Theinitial changein spending is usually associated withconsumptionbecauseitis so volatile, butchanges ininvestment, net exports, and government purchasescan cause a multiplier effect.

c

Theinitial changein spending refers to an upward-shift or downward-shift of the aggregate expenditure (AE) curve due to a change in one of its components, like investment or government spending.

d

All of the above.

e

Only a) and c)

Question 18(1 point)

Which of the following statements is true?

a

The multiplier works in both directions (up and down).

b

The multiplier effect occurs because of the interconnectedness of the economy.

c

The importance of the spending multiplier is that a small change in investment plans or consumption-saving plans can cause a much smaller change in the equilibrium level of GDP.

d

All of the above.

e

Only a) and b)