Firms report that their workers are working no overtime. The government reports that the unemployment rate is 13.5%. In this situation, the multiplier is likely to be

Question

Quizplus · Accepted Answer

If workers are not working overtime and the unemployment rate is high, it indicates that there is a significant amount of unused capacity in the economy, which means that any increase in demand will result in a large increase in output. Therefore, the multiplier is likely to be large.

Firms Report That Their Workers Are Working No Overtime