The principle of the multiplier states that:
A) any autonomous increase in spending that causes the aggregate expenditure line to shift up will result in a larger increase in national income.
B) any autonomous increase in spending that causes the aggregate expenditure line to shift up several times will result in a larger increase in national income.
C) any equilibrium increase in national income will result in a larger increase in autonomous spending.
D) for any given increase in equilibrium income, there will be a less than proportional increase in consumer spending.

Question

Quizplus · Accepted Answer

The principle of the multiplier suggests that an initial increase in spending (autonomous spending) leads to a larger increase in national income. This is because the initial spending generates income for others, who then spend a portion of this income, further increasing income and spending in the economy.

The Principle of the Multiplier States That