The effect of government spending or tax cuts on national income is measured by the:
A) multiplier.
B) output gap.
C) aggregator.
D) tax rate.

Question

Quizplus · Accepted Answer

The multiplier measures the impact of government spending or tax cuts on national income. It shows how much the change in government spending or tax cuts will affect the total level of spending and national income in the economy. The multiplier is a numerical value that is greater than 1, which means that an increase in government spending or tax cuts will lead to a larger increase in national income.

The Effect of Government Spending or Tax Cuts on National