The ratio of the change in the equilibrium level of output to a change in some autonomous variable is the
A) elasticity coefficient.
B) multiplier.
C) automatic stabilizer.
D) marginal propensity of the autonomous variable.

Question

Quizplus · Accepted Answer

The ratio of the change in equilibrium level of output to a change in some autonomous variable is called the multiplier. It measures the extent of the impact of autonomous changes in spending on output. When autonomous spending increases, the multiplier effect leads to an even greater increase in equilibrium output.

The Ratio of the Change in the Equilibrium Level of Output