Assume that government spending increases by $1 billion and national income increases by $10 billion. What is the government multiplier?
A) 0.10
B) 1.0
C) 10
D) 100

Question

Quizplus · Accepted Answer

The government multiplier is calculated as the ratio of the change in national income to the change in government spending. Here, a $1 billion increase in government spending led to a $10 billion increase in national income, so the multiplier is $10 billion / $1 billion = 10.

Assume That Government Spending Increases by $1 Billion and National