If autonomous spending decreases, then
A) equilibrium expenditure decreases by the same amount.
B) the expenditure multiplier means that equilibrium expenditure decreases by a larger amount.
C) equilibrium expenditure does not change.
D) the expenditure multiplier means that equilibrium expenditure increases by a larger amount.
E) the expenditure multiplier means that equilibrium expenditure increases by a smaller amount.

Question

Quizplus · Accepted Answer

The expenditure multiplier amplifies the effect of a change in autonomous spending, leading to a larger change in equilibrium expenditure.

If Autonomous Spending Decreases, Then