The ratio of the increase in ________ to the increase in ________ is called the multiplier.
A)equilibrium nominal GDP; autonomous expenditure
B)equilibrium real GDP; autonomous expenditure
C)autonomous expenditure; equilibrium real GDP
D)induced expenditure; equilibrium real GDP
E)planned investment; consumer spending

Question

Quizplus · Accepted Answer

The multiplier refers to the ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure. This concept is fundamental in Keynesian economics, illustrating how initial increases in spending (autonomous expenditure) lead to larger increases in real GDP.

The Ratio of the Increase in ________ to the Increase