Calculate the government spending multiplier if, an increase in government spending by $5 million increases real GDP by $25 million.
A)0.2
B)0.5
C)2
D)5
E)6

Name: Calculate the government spending multiplier if, an increase in government spending by $5 million increases real GDP by $25 million. A)0.2 B)0.5 C)2 D)5 E)6
Brand: Quizplus
Rating: 4.7 (39 reviews)

Question

Quizplus · Accepted Answer

The government spending multiplier is calculated as the change in GDP divided by the change in government spending. Here, it is $25 million / $5 million = 5.

Calculate the Government Spending Multiplier If, an Increase in Government