Consider a simple macro model with demand- determined output. In such a model, the multiplier is larger, the
A)lower the APC.
B)flatter the slope of the AE function.
C)higher the level of autonomous expenditures.
D)lower the level of autonomous expenditures.
E)steeper the slope of the AE function.

Question

Quizplus · Accepted Answer

The multiplier is larger when the slope of the Aggregate Expenditure (AE) function is steeper, as this indicates a higher marginal propensity to consume, leading to a larger change in output for a given change in autonomous expenditures.

Consider a Simple Macro Model with Demand- Determined Output