The idea of the spending multiplier is that
A) one person's spending becomes another person's income, which stimulates more spending.
B) people spend money on some items, such as food and toiletries, multiple times.
C) people tend to spend a greater amount than they originally intended.
D) when a person saves money in a bank, the bank lends it out to another person to be spent.

Question

Quizplus · Accepted Answer

The spending multiplier suggests that when one person spends money, that money becomes income for someone else, who then spends it, and so on. This continuous cycle of spending and re-spending can lead to a greater overall increase in economic activity than the initial amount spent.

The Idea of the Spending Multiplier Is That