The effect of a one-unit increase in autonomous expenditure on short-run equilibrium output is called:
A) the marginal propensity to consume.
B) average labor productivity.
C) Okun's law.
D) the income-expenditure multiplier.

Question

Quizplus · Accepted Answer

The effect of a one-unit increase in autonomous expenditure on short-term equilibrium output is measured by the income-expenditure multiplier. It shows how much total output will change in response to a change in autonomous expenditure. The other options are not related to this concept.

The Effect of a One-Unit Increase in Autonomous Expenditure on Short-Run