The ratio of the change in the equilibrium level of real GDP to the change in autonomous real expenditures is the
A) average propensity to consume.
B) marginal propensity to consume.
C) multiplier.
D) unplanned investment.

Question

Quizplus · Accepted Answer

The ratio of the change in the equilibrium level of real GDP to the change in autonomous real expenditures is known as the multiplier. It shows the impact of a change in autonomous expenditures on real GDP. Therefore, the correct choice is C, multiplier. A is incorrect because it measures the proportion of income that individuals consume on average, B is incorrect because it measures the change in consumption as a result of a change in income, and D is incorrect because it refers to unplanned changes in investment, which is not relevant to the given ratio.

The Ratio of the Change in the Equilibrium Level of Real