The spending multiplier tells us the amount by which:
A) GDP increases when spending increases by $1.
B) GDP decreases when spending on capital goods increases by $1.
C) GDP increases when saving increases by $1.
D) spending increases when GDP increases by $1.

Question

Quizplus · Accepted Answer

The spending multiplier is the amount by which GDP increases when spending increases by $1. It measures the overall impact of a change in spending on the economy.

The Spending Multiplier Tells Us the Amount by Which