Question

Because of _____, an increase in government spending results in a larger increase in real GDP. Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices discretionary fiscal policy automatic stabilizers the multiplier social insurance policies

Answer 1

Answer:

The answer is The Multiplier.

Explanation:

In economics, a multiplier is used to refer to an economic parameter that, when increased or changed, will cause an increase or change in many other related economic variables. The multiplier effect in terms of Gross Domestic Product therefore causes the gains in total output to be greater than the change in spending that caused it.

For instance, a multiplier value of 2x would have the effect of doubling; while 3x would have a tripling effect.

Therefore, because of The Multiplier, an increase in government spending will result in a larger increase in real GDP.