-Refer to Figure 10.3.If autonomous investment spending drops by enough to shift the aggregate demand curve from AD₁ to AD₂,the multiplier effect is likely to A)Create a second induced shift from AD₂ to AD₃. B)Create a second induced shift from AD₂ to AD₀. C)Have no effect on the AD curve. D)Create a second induced shift from AD₂ back to AD₁.

Question

Quizplus · Accepted Answer

The multiplier effect amplifies the initial change in spending, leading to further shifts in the aggregate demand curve.