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

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 2 years ago

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