The expenditure multipliers occur because
A)a change in autonomous expenditure causes real GDP to change in the opposite direction.
B)government expenditure on goods and services change by an amount proportional to government taxes.
C)a change in households' incomes changes autonomous expenditure.
D)any change in real GDP must also change the price level.
E)a change in autonomous expenditures changes households' incomes.

Question

Quizplus · Accepted Answer

The expenditure multipliers occur because a change in autonomous expenditures causes a change in households' incomes, which in turn induces further changes in consumption expenditures, resulting in a multiplied total change in real GDP. The expenditure multiplier is the ratio of the total change in real GDP to the initial change in autonomous expenditure.

The Expenditure Multipliers Occur Because