Assume that the marginal propensity to expend is 0.75 and therefore the multiplier is 4.According to the multiplier model,an increase in autonomous exports of 100 would raise the equilibrium level of income by 400.Explain how the multiplier process amplifies the initial shift in autonomous expenditures.

Question

Quizplus · Accepted Answer

The Answer of Assume that the marginal propensity to expend is 0.75 and therefore the multiplier is 4.According to the multiplier model,an increase in autonomous exports of 100 would raise the equilibrium level of income by 400.Explain how the multiplier process amplifies the initial shift in autonomous expenditures.

Assume That the Marginal Propensity to Expend Is 0