The Spending Multiplier Implies That Any Change in Government Spending

question 28

True/False

The spending multiplier implies that any change in government spending will have a proportionally smaller impact on real GDP.

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Definitions:

Subsidy

A financial contribution provided by the government to support or promote a particular economic activity or sector.

Elastic Demand

A market condition where the demand for a product changes significantly in response to changes in price.

Inelastic Supply

Refers to a market scenario where the quantity supplied does not change significantly when the price of the product changes.