The ratio of the change in GDP to an initial change in aggregate spending is the:
A) spending multiplier.
B) permanent income rate.
C) marginal expenditure rate.
D) marginal propensity to consume.

Question

Quizplus · Accepted Answer

The ratio of the change in GDP to an initial change in aggregate spending is known as the spending multiplier. It tells us by how much GDP will increase as a result of an increase in spending.

The Ratio of the Change in GDP to an Initial