Midwest State University in Nebraska is trying to convince Nebraska taxpayers that the tax dollars spent at Midwest State University are well spent. One of the university's arguments is that for every $1 spent by Midwest State University an additional $5 of expenditures are generated within Nebraska. Midwest State University is arguing that the multiplier for their expenditures is
A) 0.2.
B) 1.
C) 4.
D) 5.

Question

Quizplus · Accepted Answer

The multiplier is the ratio of the total impact on the economy to the initial spending. In this case, the ratio is 5:1, which means for every $1 spent by Midwest State University, an additional $5 of expenditures are generated within Nebraska. Therefore, the best choice is D.

Midwest State University in Nebraska Is Trying to Convince Nebraska