Answer to Question #71674 in Macroeconomics for Hannah

Question

If the investment accelerator from an increase in government purchases is larger than the crowding-out effect, then

a.
the multiplier is probably equal to one.

b.
the multiplier is probably less than one.

c.
the multiplier is probably zero.

d.
the multiplier is probably greater than one.

Answer 1

If the investment accelerator from an increase in government purchases is larger than the crowding-out effect, then the multiplier is probably greater than one.
So, correct answer is d.