The aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an induced
A) increase in production expenditure.
B) increase in exports.
C) increase in consumption expenditure.
D) decrease in the price level.
E) increase in government expenditures on goods and services.

Question

Quizplus · Accepted Answer

The aggregate demand multiplier effect suggests that an initial increase in expenditure leads to a chain reaction of increased consumption expenditure, as the initial spending increases income, which in turn increases consumption.

The Aggregate Demand Multiplier Effect Says That an Initial Increase