The government purchases multiplier equals the change in ________ divided by the change in ________.
A)government purchases; equilibrium real GDP
B)equilibrium real GDP; government purchases
C)government purchases; consumption spending
D)consumption spending; government purchases

Question

Quizplus · Accepted Answer

The government purchases multiplier is defined as the ratio of the change in equilibrium real GDP to the change in government purchases. This measures how much the overall economy (real GDP) changes in response to a change in government spending.

The Government Purchases Multiplier Equals the Change in ________ Divided