If investment increases by $300 and, in response, equilibrium aggregate expenditure increases by
$600, the multiplier is
A) 0.2.
B) 0.5.
C) 5.
D) 2.

Question

Quizplus · Accepted Answer

The multiplier is the ratio of the change in equilibrium aggregate expenditure to the initial change in investment. In this case, the multiplier is 600/300 = 2. Therefore, option D is the correct answer.

If Investment Increases by $300 And, in Response, Equilibrium Aggregate