The total government expenditure multiplier is less than one because
A) labour supply reacts to interest rate changes and consumption demand is affected by taxes.
B) investment demand falls dramatically when the government goes into debt.
C) government expenditures affect labour demand.
D) the marginal propensity to consume is greater than one.
E) the marginal propensity to consume is less than one.
Correct Answer:
Verified
Q43: An increase in government spending
A) increases taxes
Q44: In response to a temporary increase in
Q45: The output demand curve shows the
A) positive
Q46: Multipliers above 1 occur in models that
Q47: When drawn against the real interest rate,the
Q49: When drawn against current income,the slope of
Q50: The partial expenditure multiplier
A) is the total
Q51: A temporary increase in government spending that
Q52: The equilibrium effects of a temporary increase
Q53: The total government expenditure multiplier is
A) larger
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