The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the
A)MPC.
B)multiplier.
C)MPS.
D)consumption function.
E)macroeconomic equilibrium.

Question

Quizplus · Accepted Answer

The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the multiplier. It shows how much the final increase in real GDP will be for a given increase in autonomous expenditure. The MPC (A) is the fraction of additional income that is spent on consumption, while the MPS (C) is the fraction that is saved. The consumption function (D) is an equation that shows the relationship between consumption and income. Macroeconomic equilibrium (E) is achieved when aggregate demand equals aggregate supply.

The Ratio of the Increase in Equilibrium Real GDP to the Increase