Question

Why is it important to try to determine the size of the fiscal policy multiplier?

Why is it important to try to determine the size of the fiscal policy multiplier?

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Answer #1

It can I actually be mentioned that multipliers do play a major role in shaping out the economy as a proper fiscal policy would get to work efficiently only through the multiplier effect on the whole which is triggered with the government spending. the multiplier determines the amount of shift in the aggregate demand curve and the price level change which is important for an economy and apart from that the multiplier also tells about the the current situation of the economy and the employment gap on the whole and that is the reason why the size of the multiplier should be determined.

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