During the 2009-2010 debate on the stimulus package, democrats argued primarily for increased government spending.What effect would this have on the value of the multiplier?
A)It would decrease the value of the multiplier.
B)It would have no effect on the multiplier.
C)It would increase the value of the multiplier.
D)The effect is uncertain.

Question

Quizplus · Accepted Answer

The multiplier effect measures the increase in final income arising from any new injection of spending. When government spending increases, it creates a direct increase in aggregate demand, which then leads to a subsequent increase in national income. Therefore, an increase in government spending would increase the value of the multiplier.

During the 2009-2010 Debate on the Stimulus Package, Democrats Argued