If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion, then the multiplier is __________.
A) 0.625
B) $225 billion
C) 2
D) $75 billion

Question

Quizplus · Accepted Answer

The multiplier is the ratio of the change in equilibrium output to the initial change in autonomous expenditure. Here, the multiplier is calculated as 150/75 = 2. Thus, the correct option is C.

If a $75 Billion Increase in Autonomous Expenditure Increases Equilibrium