Question

Actual aggregate expenditure (output or GDP, billions of $)

a. The expenditure is calculated to be X billion dollars. Round your answer to the nearest whole number.
b. The multiplier is estimated to be Y. Round your answer to one decimal place.

Answer 1

The multiplier in this example is 2.13.

Step-by-step explanation:

In this example, the multiplier is calculated by dividing the change in aggregate expenditure by the initial increase in government spending.

The multiplier formula is: multiplier = change in aggregate expenditure / initial increase in government spending.

Using the example given, the initial increase in government spending is $100 and the change in aggregate expenditure is $213. Therefore, the multiplier is $213 / $100 = 2.13.