Which of the following is true of the multiplier It helps expansionary policy an

Question

Which of the following is true of the multiplier

It helps expansionary policy and greater than 1 when unemployment is below the natural rate of unemployment 5%.

It helps expansionary policy and greater than 1 when unemployment is above the natural rate of unemployment 5%.

It helps contractionary policy and greater than 1 when unemployment is above the natural rate of unemployment 5%.

It helps contractionary policy and greater than 1 when unemployment is below the natural rate of unemployment 5%.

Explanation / Answer

The correct answer is option (A)

It helps expansionary policy and greater than 1 when unemployment is below the natural rate of unemployment 5%.

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