When autonomous expenditure changes, the horizontal distance by which the aggregate demand curve shifts
A)is determined by the inverse of the multiplier.
B)depends on the size of the wealth effect.
C)depends on the size of the multiplier.
D)is increased by the existence of automatic stabilisers.

Question

Quizplus · Accepted Answer

The horizontal shift in the aggregate demand curve due to a change in autonomous expenditure is determined by the size of the multiplier, which amplifies the initial change in spending.

When Autonomous Expenditure Changes, the Horizontal Distance by Which the Aggregate