Ask Question
BusinessBusiness
26 November, 10:51

Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending?

+2
Answers (1)
  1. 26 November, 14:35
    0
    If there is $1 increase in the government purchases, this will increase the income and spending by more than $1. This increase is due to the government spending multiplier.

    The increase in government spending will lead to increase the aggregate demand and national income of a nation. Therefore, this will increase the induced spending.

    That's why one dollar increase in government spending will lead to more than one dollar increase in income and spending.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending? ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Property rights are the legal rights of ownership on which others areA. allowed to infringe by paying the property owner's pollution tax. B. able to enforce use of pollution-control technologies. C. able to specify allowable quantities of pollution.
Answers (1)
2. A book by Henry Goldman and Elizabeth Howard called Ancient Civilizations. It was published in Philadelphia by Gold House in 1989.
Answers (1)
Mia's use of illegal drugs limits her ability to walk properly. The elevator at her office was not working for many months, so Mia needed to climb two flights of stairs and had difficulty getting to her desk.
Answers (1)
If the Clearwater Cotton Candy Company hypothetically lays off its workers and shuts down, it incurs costs of $30,000. If it produces at full capacity, it incurs costs of $90,000. One would conclude that:
Answers (1)
2. If a plant asset costs $6,000.00, has accumulated depreciation of $5,000.00, and is sold for $1,200.00, the gain or loss on disposal is a (A) $1,200.00 gain. (B) $5,000.00 loss. (C) $200.00 gain. (D) $200.00 loss.
Answers (1)
New Questions in Business
Direct comments taken from another author do not have to be paraphrased
Answers (1)
No Child Left Behind legislation is the current reauthorization of the Elementary and Secondary Education Act of 1965. True False
Answers (2)
Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable.
Answers (1)
A registered representative opens a new account for a customer by telephone and receives an order to sell 300 shares of ABC at the market.
Answers (1)
Brian brewster sold property to a buyer who paid him $400,000 cash and assumed an existing mortgage of $150,000
Answers (1)
Home » Business » Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending?
Sign Up Forgot Password?