The figure above shows two aggregate expenditure lines.
-In the figure above, what is the size of the multiplier?

Question

Quizplus · Accepted Answer

The size of the multiplier can be determined by calculating the change in equilibrium output (Y) divided by the change in autonomous expenditure (A). In this case, a $0.5 trillion increase in autonomous expenditure leads to a $2 trillion increase in equilibrium output, so the multiplier is 2/0.5 = 4.0.

The Figure Above Shows Two Aggregate Expenditure Lines