The numerical coefficient showing the size of the increase in output resulting from each unit increase in government spending is called the:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → government expenditure multiplier
The government expenditure multiplier tells how much output rises for each unit rise in government spending (ΔY ÷ ΔG).
The tax multiplier works through a change in taxes, the transfer multiplier through a change in transfers, and the balanced budget multiplier through an equal change in both spending and taxes.
NCERT (2026-27): Glossary: “Government expenditure multiplier – The numerical coefficient showing the size of the increase in output resulting from each unit increase in government spending.” |