If investment increases by $300 and,in response,equilibrium aggregate expenditure increases by $600,the multiplier is

Question

Quizplus · Accepted Answer

The multiplier is the ratio of the change in equilibrium aggregate expenditure to the initial change in investment. 
So, Multiplier = Change in equilibrium aggregate expenditure / Initial change in investment

Given, Initial change in investment = $300 
Change in equilibrium aggregate expenditure = $600

Therefore, Multiplier = 600/300 = 2

Hence, the answer is (C) 2.

If Investment Increases by $300 And,in Response,equilibrium Aggregate Expenditure Increases