Question

Which of the following contributes to the popularity of the argument that government spending expands employment? Option 1: The multiplier effect Option 2: Inflation control Option 3: Reducing national debt Option 4: Private sector investment

Answer 1

Option 1: The multiplier effect

Step-by-step explanation:

The multiplier effect is a key concept in economics that suggests that an initial increase in government spending can lead to a larger overall increase in economic activity. When the government spends money, it stimulates demand for goods and services, leading to increased production and, consequently, job creation in various sectors of the economy. This is why it is often cited as a rationale for government spending to boost employment during economic downturns or to support economic growth.