Estimates of the multiplier effect indicate that the multiplier is:
A) equal to 3.1.
B) is a negative number.
C) is between .1 and 2.5, depending on the situation, with most estimates less than 2.
D) is less than 3 when the economy is growing and greater than 3 when the economy is contracting.

Question

Quizplus · Accepted Answer

The multiplier effect varies depending on the economic situation, with most estimates falling between 0.1 and 2.5, and typically less than 2. This reflects the idea that the impact of fiscal stimulus on economic output can vary widely, but it is generally positive and less than extreme values.

Estimates of the Multiplier Effect Indicate That the Multiplier Is