The expenditure multiplier is typically
A) negative.
B) greater than 1.
C) equal to 1.
D) less than 1 but greater than 0.
E) greater than 10.

Question

Quizplus · Accepted Answer

The expenditure multiplier is typically greater than 1 because an initial increase in spending (for example, government spending) leads to increased income and consumption, further increasing aggregate demand in an economy. This process repeats multiple times, leading to a total increase in economic activity that is greater than the initial spending increase.

The Expenditure Multiplier Is Typically