Proponents of spending on infrastructure as a means to stimulate the economy note that the multiplier effect for ________ is estimated to be larger than the multiplier effect for ________,and would therefore have a greater impact on expanding GDP.
A) increases in government spending; tax cuts
B) tax increases; increases in government spending
C) decreases in government spending; a balanced budget
D) a balanced budget; tax increases

Question

Quizplus · Accepted Answer

Proponents of spending on infrastructure argue that the multiplier effect - the impact on GDP from each dollar spent - is larger for increases in government spending (like infrastructure projects) than for tax cuts. Therefore, investing in infrastructure would have a greater impact on expanding GDP than tax cuts.

Proponents of Spending on Infrastructure as a Means to Stimulate