When government spending increases,consumption also increases via the multiplier process.

Question

Quizplus · Accepted Answer

Government spending can stimulate the economy through the multiplier effect, where the initial increase in spending leads to more income and consumption in the economy. This is because the increased government spending leads to an increase in demand for goods and services, which in turn leads to an increase in production and employment, and ultimately an increase in income and consumption.

When Government Spending Increases,consumption Also Increases Via the Multiplier Process