Suppose the government spending multiplier is 1.5. This means that
A) a $1 decline in government spending will raise Real GDP by $1.50.
B) a $1 rise in government spending will raise both total spending and Real GDP (assuming prices are constant) by $1.50.
C) a $1 rise in government spending will raise investment spending by $1.50.
D) a $1 rise in government spending will change interest rates by 1.50 times what it was before the $1 rise in government spending.
E) none of the above
B
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Use the information provided in Table 7.2 below to answer the question(s) that follow.
Table 7.2Inputs Required to Produce a Product Using Alternative Technologies
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A. A B. B C. C D. D