Answer to Question #113597 in Macroeconomics for John

Question

Why will the multiplier effect of government transfer payments, such as child benefit,
pensions and social security benefits be less than the full multiplier effect from government
expenditure on goods and services?

Answer 1

Because the government transfer payments are not directly injected into a goods market.Instead, the spendable funds are transferred to a member of the public who then may spend some or all of them.