How does the multiplier process work when there is an initial decrease in autonomous spending?

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Expert Solution

Autonomous expenditures are those that are not independent of the level of aggregate income in the economy. A change in autonomous expenditures results in a multiplier effect on short-run equilibrium aggregate demand and income

With fall in consumption, multiplier will work negatively and lower the consumption,lower is multiplier.

Rahul Sunny answered 1 year ago

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