Which of the following best describes the simple spending multiplier?
A) having a bird in the hand rather than two in the bush
B) two wrongs making a right
C) the spreading of ripples from a stone thrown in a pond
D) getting too much of a good thing

Question

Which of the following best describes the simple spending multiplier?  
A) having a bird in the hand rather than two in the bush 
B) two wrongs making a right 
C) the spreading of ripples from a stone thrown in a pond 
D) getting too much of a good thing

Quizplus · Accepted Answer

The simple spending multiplier refers to the idea that an initial increase in spending will lead to a larger overall increase in economic activity, much like the ripples that spread out from a stone thrown in a pond. Option A is a common phrase meaning it is better to have something for certain now than to wait for something else that may not be guaranteed. Option B refers to the fallacy that two wrong actions can somehow cancel each other out and produce a right result. Option D refers to the idea that too much of a good thing can have negative consequences.

Which of the Following Best Describes the Simple Spending Multiplier