The spending multiplier is
A) a formula to determine the total impact on savings from an initial change of a given amount.
B) a formula to determine the total impact on consumption from an initial change of a given amount.
C) only used when government spending increases.
D) a formula to determine the total impact on spending from an initial change of a given amount.
E) only used when government spending decreases.

Question

Quizplus · Accepted Answer

The spending multiplier is a formula used to determine the total impact on spending from an initial change of a given amount, typically used in the context of changes in government spending or investment. It reflects the idea that an increase in spending by one individual or entity can have a ripple effect on overall spending in the economy.

The Spending Multiplier Is