The expenditure multiplier equals
A) APC - APS where APC is the average propensity to consume and APS is the average propensity to save.
B) 1/slope of AE curve).
C) MPC - MPS where MPC is the marginal propensity to consume and MPS is the marginal propensity to consume.
D) 1/1 - slope of AE curve).

Question

Quizplus · Accepted Answer

The expenditure multiplier is calculated as 1/(1 - MPC), which is equivalent to 1/(1 - slope of the AE curve) because the slope of the AE curve is the MPC.

The Expenditure Multiplier Equals