The Expenditure Multiplier Is Larger Than One Because

question 187

Multiple Choice

The expenditure multiplier is larger than one because

• A) an increase in autonomous expenditure induces further increases in aggregate expenditure.
• B) additional expenditure induces lower incomes.
• C) an increase in autonomous expenditure brings about a reduction in the real interest rate.
• D) an increase in autonomous expenditure induces further decreases in aggregate expenditure.
• E) the price level rises, thereby reinforcing the initial effect.

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