The expenditure multiplier explains how a change in
A)autonomous expenditure leads to a change in real GDP.
B)induced expenditure leads to a change in autonomous expenditure.
C)real GDP leads to a change in induced expenditure.
D)real GDP leads to a change in autonomous expenditure.
E)induced expenditure leads to a change in real GDP.

Question

Quizplus · Accepted Answer

The expenditure multiplier shows how an initial change in autonomous expenditure (such as investment or government spending) leads to a larger change in real GDP due to the induced increases in consumption and other spending.

The Expenditure Multiplier Explains How a Change in