Firms report that their workers are working six hours of overtime per week. The government reports that the unemployment rate is 3.5%. In this situation, the multiplier is likely to be

Question

Quizplus · Accepted Answer

When the unemployment rate is low and workers are already working overtime, the economy is likely operating near full capacity. In such a situation, the multiplier effect is small because there is limited scope for increasing output through additional spending.

Firms Report That Their Workers Are Working Six Hours of Overtime