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Q: Which multiplier theory states that the economy will flourish the more the government spends?
  • A. Earning Multiplier
  • B. Keynesian Multiplier
  • C. Investment Multiplier
  • D. Fiscal Multiplier
Correct Answer: Option B - Kynesian Multiplier theory states that the economy will flourish the more the government spends. This theory was propounded by British economist John Maynard Keynes in 1936. The multiplier effect refers to the theory that government spending intended to stimulate the economy causes increase in private spending that further stimulates the economy.
B. Kynesian Multiplier theory states that the economy will flourish the more the government spends. This theory was propounded by British economist John Maynard Keynes in 1936. The multiplier effect refers to the theory that government spending intended to stimulate the economy causes increase in private spending that further stimulates the economy.

Explanations:

Kynesian Multiplier theory states that the economy will flourish the more the government spends. This theory was propounded by British economist John Maynard Keynes in 1936. The multiplier effect refers to the theory that government spending intended to stimulate the economy causes increase in private spending that further stimulates the economy.