Question

Which situation shows “no time lag” in the multiplier process?

Options

• Workers save first and spend after six months

• Workers spend their income immediately after receiving it

• Firms wait one year before paying wages

• Government delays payment of bills for many months

Answer 1

Workers spend their income immediately after receiving it

Explanation: 

“No time lag” means income is spent immediately, so each round of spending follows the previous one without delay.