If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate dema

If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate demand, we can conclude that?

1 thought on “If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate dema”

  1. The multiplier effect refers to the theory that government spending intended to stimulate the economy causes increases in private spending that additionally stimulates the economy.In essence,the theory is that government spending gives households additional income, which leads to increased consumer spending.

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