If the Value of the Government Multiplier Is 1

question 129

Multiple Choice

If the value of the government multiplier is 1.5,which of the following is likely to be true if all other variables remain unchanged?

• A) A $1 increase in government expenditure increases GDP by $1.50.
• B) A $1 increase in government expenditure reduces GDP by $1.50.
• C) A $1.50 increase in government expenditure increases GDP by $1.50.
• D) A $1.50 increase in government expenditure reduces GDP by $1.50.

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