Question

The expenditures-multiplier process is similar to the effect described by the _____________multiplier.

a) Fiscal
b) Money
c) Trade
d) Investment

Answer 1

The expenditure-multiplier process is similar to the effect described by the fiscal multiplier. When there is an autonomous increase in government spending, such as through fiscal policy, it leads to a multiplier effect.

Step-by-step explanation:

The expenditure-multiplier process is similar to the effect described by the fiscal multiplier. When there is an autonomous increase in government spending, such as through fiscal policy, it leads to a multiplier effect.

This means that the initial increase in spending creates additional income, which in turn leads to more spending and a larger impact on the overall GDP. The multiplier operates in both positive and negative directions, depending on whether there is an increase or decrease in spending.