The Estimated Size of the Multiplier Effect for Government Spending

question 63

Multiple Choice

The estimated size of the multiplier effect for government spending is

• A) almost zero if real GDP equals potential GDP.
• B) smaller if real GDP is close to potential GDP.
• C) larger if real GDP is far below potential GDP.
• D) zero if real GDP is far above potential GDP
• E) all of the above.

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Definitions:

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A criterion for scientific inquiry, asserting that for a hypothesis to be considered scientific, it must be inherently disprovable.

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