The numerical value of the multiplier will be smaller:
A) higher the level of the AE function.
B) higher the slope of the saving function.
C) higher the slope of the AE function.
D) smaller the slope of the AE function.

Question

Quizplus · Accepted Answer

The multiplier is inversely related to the slope of the saving function. A higher slope of the saving function means people save more out of an additional unit of income, leading to a smaller multiplier effect on aggregate demand.

The Numerical Value of the Multiplier Will Be Smaller