If the investment accelerator from an increase in government purchases is larger than the crowding-out effect,then
A)the multiplier is probably zero.
B)the multiplier is probably equal to one.
C)the multiplier is probably greater than one.
D)the multiplier is probably less than one.

Question

Quizplus · Accepted Answer

If the investment accelerator effect is larger than the crowding-out effect, then it suggests that the overall effect of government purchases on the economy is expansionary. This means that the multiplier is greater than one, as the increase in government spending has a larger impact on output and income than the initial increase in spending.

If the Investment Accelerator from an Increase in Government Purchases