Questions: If investment spending increases by 15 billion and real GDP increases by 75 billion, the expenditures multiplier is (square)

To find the expenditures multiplier, we use the formula:

\[ \text{Expenditures Multiplier} = \frac{\text{Change in Real GDP}}{\text{Change in Investment Spending}} \]

Given:

• Change in Real GDP = \$75 billion
• Change in Investment Spending = \$15 billion

Substitute these values into the formula:

\[ \text{Expenditures Multiplier} = \frac{75}{15} = 5 \]

Therefore, the expenditures multiplier is 5.

In summary, the expenditures multiplier is 5, indicating that for every dollar increase in investment spending, real GDP increases by five dollars.