The Reason for the Multiplier Effect Is That

Multiple Choice

The reason for the multiplier effect is that

A) businesses make decisions about investment projects based on anticipated profits.
B) one person's additional expenditure creates a new source of income for another person, and this additional income leads to still more spending.
C) changes in government spending typically deepen recessions and exacerbate inflationary conditions in the economy.
D) additional spending lowers the rate of interest and leads to further borrowing and spending.