Question

An example of the multiplier effect is when

the government increases government spending initially by $100 billion, and total income in the economy increases by less than $100 billion.

an increase in the price level leads to a shift in the aggregate demand curve.

the government increases government spending initially by $100 billion, and total income in the economy increases by more than $100 billion.

an increase in government spending leads to a decrease in private investment.

short-run aggregate supply shifts in a response to fiscal policy.

Answer 1

the government increases government spending initially by $100 billion, and total income in the economy increases by more than $100 billion.

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Increase in government spending increases income more than that eventually is the multiplier effect.

The increase in government spending shifts the AD curve to the right and increases income and price level.

CHange in the price level is a movement along the same curve, and it is not called the multiplier effect.