Because of the existence of the aggregate demand multiplier,a $10 billion change in expenditure
A)shifts the aggregate demand curve by more than $10 billion.
B)shifts the aggregate demand curve by $10 billion.
C)shifts the aggregate demand curve by less than $10 billion.
D)changes the slope of the aggregate demand curve so it is less steep.
E)changes the slope of the aggregate demand curve so it is steeper.

Question

Quizplus · Accepted Answer

The aggregate demand multiplier means that a change in expenditure will have a multiplied effect on aggregate demand. Therefore, a $10 billion change in expenditure will shift the aggregate demand curve by more than $10 billion. The exact amount will depend on the size of the multiplier, which is determined by various factors such as the marginal propensity to consume.

Because of the Existence of the Aggregate Demand Multiplier,a $10