As the economy approaches full employment, the size of the multiplier will

Question

Quizplus · Accepted Answer

As the economy approaches full employment, the size of the multiplier will become smaller. This is because as the economy approaches full employment, the availability of resources becomes constrained, leading to diminishing returns to additional investment. As a result, each additional dollar of spending will have a smaller impact on overall output.

As the Economy Approaches Full Employment, the Size of the Multiplier