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.