The simple multiplier,which applies to short-run situations in which the price level is constant,describes changes in
A)investment induced by changes in equilibrium income.
B)saving caused by changes in desired investment.
C)the equilibrium level of national income caused by changes in autonomous expenditure.
D)the equilibrium rate of interest caused by changes in the demand for credit.
E)employment induced by changes in equilibrium income.

Question

Quizplus · Accepted Answer

The simple multiplier describes the relationship between changes in autonomous expenditure (such as government spending or investment) and the resulting change in equilibrium income. Therefore, the correct answer is C, as it directly relates to changes in the equilibrium level of national income caused by changes in autonomous expenditure.

The Simple Multiplier,which Applies to Short-Run Situations in Which the Price