3. What is the multiplier when the change in equilibrium level of real GDP in the aggregate expenditures model is 9, and change in autonomous aggregate expenditures is 3?
Answers
Answer:
The Multiplier equation is as follows: Multiplier = Change in Equalibrium Level of real GDP/ Autonomous Agreegate Expenditures To solve the question above I will be using the equation above. Multiplier = 9/3 which means our multiplier equals 3.
Given,
The equilibrium level of real GDP in the aggregate expenditures model is 9.
The change in autonomous aggregate expenditures is 3.
To find,
The multiplier.
Solution,
(The multiplier effect causes improvements in total output to be greater than the change in spending that created it in terms of GDP. In most cases, the phrase multiplier refers to the link between government spending and total national revenue.)
The following is the Multiplier equation:
Multiplier = Change in Real GDP Equilibrium/ Autonomous Aggregate Expenditures
We will use the equation above to answer the question above.
⇒ Multiplier = Change in Real GDP Equilibrium/ Autonomous Aggregate Expenditures
⇒ Multiplier = 9/3, implying that our multiplier is 3.
Hence, the multiplier when the change in the equilibrium level of real GDP in the aggregate expenditures model is 9, and change in autonomous aggregate expenditures is 3 is equal to 9/3 = 3.