If an Increase of $10 Billion of Investment Results in an Increase

question 34

Multiple Choice

If an increase of $10 billion of investment results in an increase in equilibrium expenditure of $40 billion, the expenditure multiplier equals

• A) $10 billion × $40 billion = $400 billion.
• B) $40 billion - $10 billion = $30 billion.
• C) $40 billion ÷ $10 billion = 4.
• D) $10 billion ÷ $40 billion = 0.25.
• E) $10 billion - $40 billion = -$30 billion.

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