Which of the following best describes the simple spending multiplier?
A)It shows the magnified change in planned aggregate spending that arises from a change in output.
B)It shows the magnified change in equilibrium output demanded that arises from a change in income.
C)It shows the magnified change in planned aggregate spending that arises from a change in equilibrium output.
D)It shows the magnified change in equilibrium output demanded that arises from a given initial change in planned aggregate spending.
E)It shows the change in planned aggregate spending that arises from a change in real output.

Question

Quizplus · Accepted Answer

The simple spending multiplier shows the magnified change in equilibrium output demanded that arises from a given initial change in planned aggregate spending. This is because an initial increase in spending will stimulate additional spending throughout the economy, leading to a larger final increase in equilibrium output.

Which of the Following Best Describes the Simple Spending Multiplier