The Idea Behind the Spending Multiplier Is That New Spending

question 152

True/False

The idea behind the spending multiplier is that new spending causes more spending, income, and output than just an amount equal to the new spending itself.

---

Definitions:

Inflation Rate

The percentage increase in the general level of prices for goods and services in an economy over a period of time, typically measured annually.

Average Level

A mean or typical value obtained by dividing the total of all observed values of a variable by the number of observations.

Discouraged Workers

Individuals who are not actively seeking employment due to believing that no jobs are available for them or there are no jobs for which they would qualify.

Frictional Unemployment

Unemployment that occurs when people are between jobs or are entering the workforce for the first time.