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WAEC Economics 1995 Question 31

Question 31

National Income

Which of the following best describes the multiplier?

  1. A.Product of income and expenditure
  2. B.Curves of saving and expenditure
  3. C.Ratio of change in income to the expenditure that brought it about
  4. D.Constant level of income
  5. E.Equality of marginal propensities to consume and save
Show the answer and explanation

Answer: C (Ratio of change in income to the expenditure that brought it about)

Explanation

Multiplier = change in income ÷ change in (investment) expenditure that caused it.