If investment increases by $100,then the aggregate expenditure model concludes that equilibrium expenditure
A)decreases by $100.
B)increases by $100.
C)increases by more than $100.
D)remains unchanged.
E)increases by less than $100.

Question

Quizplus · Accepted Answer

In the aggregate expenditure model, an increase in investment leads to a multiplied increase in equilibrium expenditure due to the multiplier effect, resulting in an increase greater than the initial investment.

If Investment Increases by $100,then the Aggregate Expenditure Model Concludes