The government spending multiplier is likely to be smaller during periods of

Question

Quizplus · Accepted Answer

The government spending multiplier is likely to be smaller during periods of high output and low unemployment because in this situation, the economy is already operating close to its maximum capacity. As a result, any increase in government spending is likely to be offset by a decrease in private spending, reducing the overall impact of the spending multiplier.

The Government Spending Multiplier Is Likely to Be Smaller During