AP Macroeconomics Question 69: Answer and Explanation

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Question: 69


According to the aggregate expenditure graph above, what is the value of the expenditure multiplier?

  • A. 2
  • B. 2.25
  • C. 3
  • D. 4
  • E. 5

Correct Answer: E


E The expenditure multiplier is found by dividing the change in income by the change in spending, so 500 รท 100 = 5. The multiplier says that when a component of aggregate expenditure is increased, the real national income/output will increase by more, according to the multiplier. The answer is (E).