A Fiscal Multiplier Effect Occurs When

question 40

Multiple Choice

A fiscal multiplier effect occurs when:

• A) the change in total spending due to a fiscal policy action has an impact on GDP that is larger than the change in government spending.
• B) the change in total spending due to a fiscal policy action is larger than the resulting change in GDP.
• C) total government spending rises more rapidly than GDP without specific intervention by policymakers.
• D) a change in total spending due to a fiscal policy action is increased each year to have a progressively larger and larger impact on GDP.

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Definitions:

Logistics Department

The division of a company responsible for the management of the movement and storage of materials, goods, and information.

Operating Divisions

Sections of a business organization that operate semi-autonomously, typically responsible for their own budgeting and profit and loss.

Variable Costs

Expenses that change in proportion to the level of production or sales volume.

Fixed Costs

Expenses that do not change regardless of the level of production, like leases and salaries.