If the multiplier is 3,a $20 billion increase in autonomous consumption will cause a
A)$20 billion increase in equilibrium consumption
B)$60 billion increase in equilibrium consumption
C)$20 billion increase in equilibrium real GDP demanded
D)$60 billion increase in equilibrium real GDP demanded
E)$60 billion decrease in autonomous saving

Question

Quizplus · Accepted Answer

The multiplier effect amplifies the initial change in spending. With a multiplier of 3, a $20 billion increase in autonomous consumption leads to a $60 billion increase in equilibrium real GDP demanded.

If the Multiplier Is 3,a $20 Billion Increase in Autonomous