One Year, the Government of Econia Chooses to Spend an Additional

Multiple Choice

One year, the government of Econia chooses to spend an additional $20 million on worker salaries to build new playgrounds. The playground workers spend a significant part of their salaries on consumer goods. The vendors that they buy from then have higher profits and spending power. GDP eventually rises by $28 million, which is $8 million more than the increase in government spending. Economists call this phenomenon the _____ effect.

A) multiplier
B) government spending
C) countercyclical
D) enhanced stabilizer