When government spending increases,consumption also increases via the multiplier process.
Fiscal stimulus will set off the multiplier process.As a result of this,aggregate demand will increase (shift)in two distinct steps: (1)the initial fiscal stimulus and (2)induced changes in consumption.

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Quizplus · Accepted Answer

The statement is true. Fiscal stimulus, which involves an increase in government spending, can set off the multiplier process. This leads to an increase in consumption, which further increases aggregate demand in two steps: the initial fiscal stimulus and induced changes in consumption.

When Government Spending Increases,consumption Also Increases Via the Multiplier Process