Suppose the multiplier is 4.ceteris paribus,a change in autonomous spending will change total spending more if the aggregate supply curve is __________ than if it is __________.

Question

Quizplus · Accepted Answer

A horizontal aggregate supply curve implies that any change in autonomous spending will lead to a full multiplier effect on total spending, as prices remain constant. An upward sloping aggregate supply curve would dampen the multiplier effect because some of the increase in spending would lead to higher prices rather than an increase in output.

Suppose the Multiplier Is 4