If the expenditure multiplier is 5,the slope of the aggregate expenditure (AE)curve is
A)0.8.
B)0.7.
C)0.5.
D)0.6.
E)0.2.

Name: If the expenditure multiplier is 5,the slope of the aggregate expenditure (AE)curve is A)0.8. B)0.7. C)0.5. D)0.6. E)0.2.
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Question

Quizplus · Accepted Answer

The slope of the AE curve is equal to the expenditure multiplier divided by (1 + the expenditure multiplier). Therefore, if the expenditure multiplier is 5, the slope of the AE curve is 5 / (1 + 5) = 0.8.

If the Expenditure Multiplier Is 5,the Slope of the Aggregate