The Basic Idea of the Fiscal Multiplier Is That an Initial

question 32

Multiple Choice

The basic idea of the fiscal multiplier is that an initial increase in government spending will have a:

• A) more than a one- to- one impact on short run aggregate supply.
• B) more than a one- to- one impact on aggregate demand.
• C) more than a one- to- one impact on long run aggregate supply.
• D) more than a one- to- one impact on the budget deficit.

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Definitions:

Ask Price

The lowest price a seller is willing to accept for an asset in the market.

Corporate Bond

A debt security issued by a corporation to raise funding, which offers interest payments to holders until maturity.

Futures Contract

A standardized legal agreement to buy or sell a specific commodity or financial asset at a predetermined price at a specified time in the future.

US Treasury Repo

A form of short-term borrowing for dealers in government securities, using U.S. Treasury securities as collateral.