If government spending decreases, then output _____ by _____ than the change in spending.
A) increases, more
B) increases, less
C) decreases, more
D) decreases, less

Question

Quizplus · Accepted Answer

When government spending decreases, it directly reduces aggregate demand, leading to a decrease in output. The decrease in output is typically more than the initial decrease in spending due to the multiplier effect, where one person's spending becomes another person's income, leading to a chain reaction of reduced spending throughout the economy.

If Government Spending Decreases, Then Output _____ by _____ Than

If Government Spending Decreases, Then Output _ by _ Than