If Consumption Growth Decreases, the Government Spending "Multiplier Effect" Means $\vec { G }$

question 245

Multiple Choice

If consumption growth decreases, the government spending "multiplier effect" means that in order to counter the recession:

• A) the government cannot use fiscal policy.
• B) the government is forced to use both tax cuts and increases in \(\vec { G }\)
• .
• C) fiscal policy needs to raise \(\vec { G }\)
• By less than the decrease in \(\vec { C }\)
• .
• D) fiscal policy needs to raise \(\vec { G }\)
• By more than the decrease in \(\vec { C }\)
• .

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Definitions:

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