If $10 billion of spending by the government results in a $40 billion increase in aggregate demand,what is the multiplier?
A)0.25
B)1
C)4
D)3

Question

Quizplus · Accepted Answer

The multiplier is determined by dividing the change in aggregate demand by the original change in spending. In this case, the change in aggregate demand is $40 billion and the original change in spending was $10 billion. Therefore, the multiplier is 4.

If $10 Billion of Spending by the Government Results in a $40