Answer to Question #87571 in Macroeconomics for nhlanhla Faith Nkomo

Question

Suppose autonomous expenditure increases by 1 trillion, and as a result, equilibrium income increases by 3 trillion, what is the value of the multiplier?

Answer 1

Multiplier is calculate by formula:

$$M=ΔY/ΔA$$

where ΔY is changes in equilibrium income and ΔA is changes in autonomus expenditure.

In this way,

$$M=3/1=3$$

Answer: multiplier is 3.