An economy has no imports or income taxes.An increase in autonomous expenditure of $40 billion increases equilibrium expenditure by $160 billion.The expenditure multiplier equals

Question

Quizplus · Accepted Answer

The expenditure multiplier can be calculated as follows:
Multiplier = Change in equilibrium expenditure / Change in autonomous expenditure
Multiplier = $160 billion / $40 billion
Multiplier = 4
Therefore, the answer is D.

An Economy Has No Imports or Income Taxes