alleryStart learning →Government spending rises by 100 and GDP rises by 150 with no change in tax rates. The spending multiplier is:
A0.67
B1.5
C2.5
D15
Answer & Solution
Correct answer: B. 1.5
The spending multiplier is the rise in GDP divided by the rise in spending, which is 150 divided by 100, or 1.5.
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