When autonomous expenditure increases, equilibrium aggregate expenditure
A) decreases by an equal amount.
B) increases by an equal amount.
C) decreases by a greater amount due to the multiplier.
D) increases by a greater amount due to the multiplier.

Question

Quizplus · Accepted Answer

When autonomous expenditure increases, the total increase in equilibrium aggregate expenditure is amplified by the multiplier effect, leading to a greater increase than the initial autonomous expenditure.

When Autonomous Expenditure Increases, Equilibrium Aggregate Expenditure