Suppose an initial increase in government expenditure increases output by $50,000. if the size of the multiplier was 1.0, the size of the initial increase in government expenditure was $50000.
How to solve for the change in multiplier
We can solve for the change in multiplier by using this formula which is Change in output / multiplier
The change in output is 50000 while the change in multiplier is 1
This would give us 50000 / 1 = 50000
What is the government multiplier?
This is the terminology that is used in economics to refer to the fact that an additional spending by the government of an economy would cause the income of the household to rise.
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