Which one of the following best illustrates the multiplier process?
A rise in national income leading to a proportionately greater increase in investment spending.
An initial injection of spending into the economy leading to a larger final increase in national income.
A reduction in the base rate of interest resulting in an increase in aggregate demand and inflation.
High levels of government borrowing causing a rise in interest rates and a reduction in private sector investment.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.