Recall Application 2, "Using Long-Term Macro Data to Measure Multipliers

question 62

Multiple Choice

Recall Application 2, "Using Long-Term Macro Data to Measure Multipliers," to answer the following questions:
-According to the application, the reason why other studies found a strong correlation between government spending and GDP was:

• A) because government spending increased in response to an increase in GDP.
• B) because the increase in GDP was caused by an increase in government spending.
• C) because government spending lowered interest rates and increased investments.
• D) A and C are correct.

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