The expenditure multiplier is typically
A) less than 1 but greater than 0.
B) greater than 1.
C) equal to 1.
D) greater than 10.
E) negative.

Question

Quizplus · Accepted Answer

The expenditure multiplier is the ratio of a change in national income to the change in autonomous expenditures that caused it. Since autonomous expenditures (such as government spending or investment) have a greater impact on the economy than changes in consumer spending, the expenditure multiplier is typically greater than 1.

The Expenditure Multiplier Is Typically