If a $10 increase in government expenditure produces a change of $17 in GDP,the value of the government expenditure multiplier is ________.
A) 1.7
B) 7
C) 27
D) 170

Question

Quizplus · Accepted Answer

The government expenditure multiplier is calculated as the change in GDP divided by the change in government expenditure. In this case, the government expenditure multiplier would be:
Multiplier = Change in GDP / Change in Government Expenditure
Multiplier = $17 / $10
Multiplier = 1.7
Therefore, the answer is A) 1.7.

If a $10 Increase in Government Expenditure Produces a Change