Final answer:
The multiplier effect is not exclusive to government actions; it can result from any fiscal change. An economy with a high multiplier is less stable, while a low multiplier indicates a more stable economy but implies weaker government policy impact.
Step-by-step explanation:
The statement that 'The multiplier effect comes about only if government is involved in the process of stabilizing or growing the economy' is false. The concept of the multiplier effect is broader and not limited to government actions. It relates to any change in fiscal activity that can lead to a proportional increase in overall economic activity. Government policy can certainly influence the multiplier effect, especially in the context of macroeconomic policy. For example, adjustments in taxes or government spending can amplify or dampen economic cycles. However, the multiplier effect can also occur from private sector investment, consumption, and other non-governmental changes in aggregate spending.
An economy with a high multiplier will tend to be less stable than one with a low multiplier, as it is more responsive to changes in the economy or government policy. Conversely, an economy with a low multiplier is more stable, experiencing fewer fluctuations from economic events or policy changes, though it also implies that government policy has a weaker effect on macroeconomic stabilization.