If the slope of the aggregate expenditure curve is 0.75, the expenditure multiplier is equal to
A) 4.00.
B) 0.25.
C) 5.00.
D) 1.33.
E) 0.75.

Name: If the slope of the aggregate expenditure curve is 0.75, the expenditure multiplier is equal to A) 4.00. B) 0.25. C) 5.00. D) 1.33. E) 0.75.
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Question

Quizplus · Accepted Answer

The expenditure multiplier is calculated as 1/(1 - slope of the aggregate expenditure curve), so with a slope of 0.75, the multiplier is 1/(1 - 0.75) = 4.00.

If the Slope of the Aggregate Expenditure Curve Is 0