The government-purchases multiplier indicates how much ______ change(s) in response to a $1 change in government purchases.
A) the budget deficit
B) consumption
C) income
D) real balances

Question

Quizplus · Accepted Answer

The government-purchases multiplier measures the change in income that results from a change in government purchases, assuming all other factors remain constant. Therefore, the correct choice is income. The other options (budget deficit, consumption, and real balances) are not directly related to the government-purchases multiplier.

The Government-Purchases Multiplier Indicates How Much ______ Change(s) in Response