AP Macroeconomics Question 69: Answer and Explanation
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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 ÷ 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).