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