The multiplier shows that as ________ expenditure changes, real GDP changes by ________ amount.
A)autonomous; an even larger
B)autonomous; the same
C)induced; the same
D)induced; an even larger
E)induced; a smaller

Question

Quizplus · Accepted Answer

The multiplier effect refers to the phenomenon where an initial change in autonomous expenditure (such as investment or government spending) leads to a larger change in real GDP. This is because the initial spending creates income for others, who then spend a portion of that income, further increasing GDP.

The Multiplier Shows That as ________ Expenditure Changes, Real GDP