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Which of the following best describes the simple spending multiplier?
A) It shows the magnified change in planned aggregate spending that arises from a change in output.
B) It shows the magnified change in equilibrium output demanded that arises from a change in income.
C) It shows the magnified change in planned aggregate spending that arises from a change in equilibrium output.
D) It shows the magnified change in equilibrium output demanded that arises from a given initial change in planned aggregate spending.
E) It shows the change in planned aggregate spending that arises from a change in real output.
Spending Multiplier
the ratio of the change in total national income to the initial change in spending that brought it about, illustrating how initial spending leads to increased total spending in an economy.
Aggregate Spending
Aggregate spending is the total amount of spending in an economy, including consumption, investment, government expenditures, and net exports during a specific period.
- Determine and explain the straightforward spending multiplier effect.
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Learning Objectives
- Determine and explain the straightforward spending multiplier effect.
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