A $1.5 trillion increase in investment leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion.In this case, the expenditure multiplier is
A) 1.50.
B) 2.33.
C) 4.67.
D) 7.00.
E) 10.5.

Question

Quizplus · Accepted Answer

Expenditure multiplier = (change in equilibrium expenditure) / (change in investment)
= ($10.5 trillion - $7.0 trillion) / ($1.5 trillion)
= $3.5 trillion / $1.5 trillion
= 2.33

A $15 Trillion Increase in Investment Leads Equilibrium Expenditure to Increase