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The ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous expenditure is called?

Solution

✅ Correct Option: 2

The investment multiplier is the ratio of the total increase in equilibrium output of final goods to the initial increase in autonomous expenditure: k=ΔY/ΔA=1/(1−c)k = \Delta Y/\Delta A = 1/(1-c), where cc is the MPC.

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