Assume that government spending increases by $1 billion and national income increases by $10 billion. What is the government multiplier?

Question

Quizplus · Accepted Answer

The government multiplier is calculated as the change in national income divided by the change in government spending. In this case, the multiplier is 10 ($10 billion/$1 billion), meaning that for each additional dollar of government spending, national income will increase by $10.

Assume That Government Spending Increases by $1 Billion and National