economics hard Fill in the Blank

The 'Fiscal ___' measures the ratio of the change in national income to the initial change in autonomous government spending that caused it, capturing the ripple effect of public expenditure through the economy.

  1. Okun's
  2. final
  3. multiplier
  4. decrease (or reduce / lower)

Answer: multiplier

When the government spends Rs. 100 on building a road, that money becomes income for construction workers, who then spend a portion of it on food and clothes, creating income for others. The fiscal multiplier quantifies this chain reaction. If the multiplier is 1.5, an initial Rs. 100 injection ultimately expands the total GDP by Rs. 150.

Topic Public Finance - Concepts
Exam Relevance UPSC Prelims, SSC CGL
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