If the multiplier is 6 and exports decrease by $30, what impact will that have on aggregate expenditure? Aggregate expenditure will
A) increase by $30.
B) increase by $180.
C) decrease by $30.
D) decrease by $180.

Question

Quizplus · Accepted Answer

The multiplier effect means that a change in spending (such as a decrease in exports) will have a multiplied impact on the aggregate expenditure. With a multiplier of 6, a decrease in exports by $30 will decrease aggregate expenditure by 6 * $30 = $180.

If the Multiplier Is 6 and Exports Decrease by $30