The expenditure multiplier leads to greater than one-for-one changes in output when autonomous expenditure changes because
A. changes in inventories signal producers to adjust the level of output.
B. multiple deposits are generated when new reserves are produced through fractional reserve banking.
C. the direct changes in expenditure change the income of households, which leads to additional changes in expenditure.
D. autonomous expenditure supports more output than induced spending.
Answer: C
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