The Government Buys a Bridge

Multiple Choice

The government buys a bridge. The owner of the company that builds the bridge pays her workers. The workers increase their spending. Firms that the workers buy goods from increase their output. Which of the following does this type of effect on spending illustrate?

A) the multiplier effect
B) the crowding-out effect
C) the marginal propensity to consume effect
D) the catch-up effect