Respuesta :
If autonomous spending increases by $500 billion and, as a result, equilibrium real GDP increases by $2 trillion, then we know that the expenditure multiplier is 4.0.
What is the expenditure multiplier?
- The expenditure multiplier (also known as the spending multiplier) is a ratio that relates the entire change in a country's GDP produced by an autonomous change in aggregate spending to the amount of that change in spending.
- It calculates the impact of each dollar spent during an initial spending increase on a country's total real GDP.
- The impact of a change in revenue caused by a change in government spending is referred to as the government expenditure multiplier, denoted by kG.
- Thus, the government expenditure multiplier is the ratio of an increase in revenue (Y) to an increase in government spending (G).
- For example, if autonomous spending rises by $500 billion and equilibrium real GDP rises by $2 trillion as a result, we know that the expenditure multiplier is 4.0.
Therefore, if autonomous spending increases by $500 billion and, as a result, equilibrium real GDP increases by $2 trillion, then we know that the expenditure multiplier is 4.0.
Know more about expenditure multiplier here:
https://brainly.com/question/15883095
#SPJ4
