The multiplier tells us the relationship between
A) the interest rate and the level of investment expenditure.
B) the exchange rate and the level of exports.
C) the exchange rate and the level of imports.
D) a change in autonomous spending and the resulting change in equilibrium real GDP.

Question

Quizplus · Accepted Answer

The multiplier relates to the change in autonomous spending (such as government spending, investment, or exports) and the resulting change in equilibrium real GDP. It measures the extent to which a change in autonomous spending leads to a larger change in real GDP through the multiplier effect. Changes in interest rates, exchange rates, imports, and exports can all affect spending and the economy, but these do not directly relate to the multiplier concept.

The Multiplier Tells Us the Relationship Between