Because of the existence of the aggregate demand multiplier,a $10 billion change in expenditure
A)shifts the aggregate demand curve by less than $10 billion.
B)shifts the aggregate demand curve by $10 billion.
C)shifts the aggregate demand curve by more than $10 billion.
D)changes the slope of the aggregate demand curve so it is steeper.
E)changes the slope of the aggregate demand curve so it is less steep.

Question

Quizplus · Accepted Answer

The existence of the aggregate demand multiplier implies that a change in expenditure will have a greater impact on the overall economy than the initial expenditure change. Therefore, a $10 billion change in expenditure will shift the aggregate demand curve by more than $10 billion due to the multiplier effect.

Because of the Existence of the Aggregate Demand Multiplier,a $10