Equilibrium GDP is equal to
A)autonomous expenditure times the marginal propensity to consume.
B)autonomous expenditure times the marginal propensity to save.
C)autonomous expenditure times the multiplier.
D)autonomous expenditure.

Question

Quizplus · Accepted Answer

Equilibrium GDP is determined by the relationship between autonomous expenditure and the multiplier. Autonomous expenditure is the component of aggregate expenditure that is independent of the level of GDP, while the multiplier represents the impact of a change in autonomous expenditure on GDP. Therefore, equilibrium GDP is equal to autonomous expenditure times the multiplier.

Equilibrium GDP Is Equal to