Answer the following question based on the table below which illustrates the multiplier process resulting from an autonomous increase in investment by $5. Refer to the above table. The multiplier in this economy is:
A) 2
B) 3
C) 4
D) 5

Question

Answer the following question based on the table below which illustrates the multiplier process resulting from an autonomous increase in investment by $5.  Refer to the above table. The multiplier in this economy is:
A) 2 
B) 3 
C) 4 
D) 5

Quizplus · Accepted Answer

The multiplier is calculated by dividing the change in real GDP (in this case, $20) by the initial autonomous increase in investment (in this case, $5). $20 ÷ $5 = 4, so the multiplier in this economy is 4.

Answer the Following Question Based on the Table Below Which