In fiscal macroeconomics, what does the government spending multiplier measure?
Answer and explanation
Correct answer: A. The multiple by which total national income changes in response to an initial change in autonomous government spending
- Step 1: The Keynesian fiscal multiplier () measures the total change in aggregate equilibrium output resulting from an autonomous injection of government expenditure. Answer: The multiple by which total national income changes in response to an initial change in autonomous government spending. Why not the others: Defense allocation is a budget line item, bank reserve conversion is money velocity, and highway approvals are administrative regulations.
Practise more Microeconomics, Business Operations, Financial Management and the Macroeconomic Environment.
Free questions with an explanation for every one, and full timed Poklicna matura (Vocational Matura Slovenia) mock tests.
More Microeconomics, Business Operations, Financial Management and the Macroeconomic Environment questions
- In microeconomics, what fundamental economic concept describes the value of the next best alternative forgone when making a decision?
- In market analysis, what effect does an increase in the market price of a normal good generally have on consumer demand, ceteris paribus?
- In microeconomic theory, what is the term for a market structure characterized by a single seller supplying a unique product with no close s…
- In business production, which of the following is classified as a fixed cost in the short run?
- In price elasticity analysis, what does a price elasticity of demand coefficient with an absolute value greater than one (|Ed| > 1) indicate…
- In economic analysis, at what point is market equilibrium achieved in a competitive market for consumer goods?