When autonomous expenditure changes, the horizontal distance by which the aggregate demand curve shifts
A) depends on the size of the wealth effect.
B) depends on the size of the multiplier.
C) is increased by the existence of automatic stabilizers.
D) is determined by the inverse of the multiplier.

Question

Quizplus · Accepted Answer

The horizontal distance by which the aggregate demand curve shifts when autonomous expenditure changes is determined by the size of the multiplier. The larger the multiplier, the greater the shift.

When Autonomous Expenditure Changes, the Horizontal Distance by Which the Aggregate