Assume proponents of public funding for a new stadium argue that every dollar spent building the sports and entertainment facility will generate a total of $2.05 in spending in the economy.This indicates that the spending multiplier for the construction industry is equal to
A)0.5.
B)1.21.
C)1.70.
D)2.05.
E)4.25.

Question

Quizplus · Accepted Answer

The spending multiplier for the construction industry is simply the amount of total spending generated in the economy per one dollar of spending in the construction industry. Here, the proponents argue that every dollar spent building the sports and entertainment facility will generate a total of $2.05 in spending in the economy, thus the spending multiplier is 2.05. Therefore, the correct answer is D.

Assume Proponents of Public Funding for a New Stadium Argue