The government expenditure multiplier is used to determine the
A)extra scrutiny government action receives.
B)amount aggregate demand is affected by a change in government expenditure.
C)amount aggregate supply is affected by a change in government expenditure.
D)amount private consumption is decreased by government expenditure.
E)extent to which automatic stabilizers must be changed in order to avoid recessions.

Question

Quizplus · Accepted Answer

The government expenditure multiplier is a measure of how much a change in government expenditure affects aggregate demand. It is calculated by dividing the change in GDP by the change in government expenditure. Therefore, B is the best choice as it directly relates to the purpose of the government expenditure multiplier.

The Government Expenditure Multiplier Is Used to Determine the