Question

The multiplier justifies government intervention in the economy because ______.

Options

• Private businesses cannot operate without government funding

• Even a small increase in government investment leads to a many times increase in income

• Classical economists always supported state intervention

• The multiplier only works when the government controls all industries

Answer 1

The multiplier justifies government intervention in the economy because even a small increase in government investment leads to a many times increase in income.

Explanation:

The multiplier shows that a small amount of government investment can generate a much larger increase in national income. This justifies state intervention, especially during economic downturns, departing from the classical laissez-faire approach.