The ratio of the increase in ________ to the increase in ________ is called the multiplier.
A)equilibrium nominal GDP; autonomous expenditure
B)equilibrium real GDP; autonomous expenditure
C)autonomous expenditure; equilibrium real GDP
D)induced expenditure; equilibrium real GDP

Question

Quizplus · Accepted Answer

The multiplier concept in economics refers to the ratio of the change in equilibrium real GDP to the change in autonomous expenditure. This concept illustrates how an initial change in spending (autonomous expenditure) leads to a larger change in the overall economic output (equilibrium real GDP).

The Ratio of the Increase in ________ to the Increase