A change in autonomous aggregate expenditures will shift aggregate demand by an amount
Jequal to the change in autonomous aggregate expenditures times the multiplier.

Question

Quizplus · Accepted Answer

This is the basic formula for calculating the impact of changes in autonomous spending on aggregate demand in Keynesian economics. The multiplier effect occurs because an initial increase in spending leads to a chain reaction of additional spending as income and output levels rise.

A Change in Autonomous Aggregate Expenditures Will Shift Aggregate Demand