Which of the following statements about the multiplier is correct?
A) The spending multiplier can work to increase or to decrease equilibrium GDP.
B) The spending multiplier exists only during economic expansions.
C) The size of the spending multiplier is dictated by the amount of government spending.
D) The value of the spending multiplier is the inverse of the marginal propensity to consume.

Question

Quizplus · Accepted Answer

The spending multiplier can increase or decrease equilibrium GDP depending on whether there is an increase or decrease in spending.

Which of the Following Statements About the Multiplier Is Correct