The Multiplier Effect of Fiscal Policy Means That a Change

question 80

Multiple Choice

The multiplier effect of fiscal policy means that a change in government spending:

• A) has a larger impact on output than the size of the change in spending.
• B) leads to a change in the money supply that is a multiple of the spending change.
• C) has a bigger impact on the budget balance than the size of the spending change.
• D) has more impact on the number of jobs than on GDP.

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Definitions:

Accumulated Depreciation

The total amount of a tangible asset's cost that has been expensed over time through depreciation.

Original Cost

The initial monetary value of an asset or investment, reflecting the purchase price or production cost before adjustments like depreciation or amortization.

Gain on Sale

Profit realized from the sale of assets or investments when the selling price exceeds the book value.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.