The formula,, is the $\frac { 1 } { 1 - \text { slope of the AE curve } }$
A) marginal propensity to consume.
B) marginal propensity to export.
C) expenditure multiplier.
D) marginal tax rate.
E) total amount of autonomous expenditure.

Question

Quizplus · Accepted Answer

The formula is the expenditure multiplier, which indicates the amount of change in real GDP generated by a unit change in autonomous expenditure. It is calculated as the inverse of the marginal propensity to save or the inverse of the fraction of income not spent on consumption. As such, it represents the cumulative effect of the initial autonomous expenditure on output, as it leads to more income, and therefore more consumption and investment, which in turn generates more income and output.

The Formula,, Is The 11− slope of the AE curve \frac { 1 } { 1 - \text { slope of the AE curve } }1− slope of the AE curve 1​

The Formula,, Is The $\frac { 1 } { 1 - \text { slope of the AE curve } }$