If the slope of the AE curve increases, the multiplier
A) increases.
B) stays the same.
C) decreases.
D) can either increase or decrease depending on what happens to the MPC.

Question

Quizplus · Accepted Answer

According to the formula for the multiplier (1/1-MPC), if the slope of the AE curve increases, this means the MPC has increased. Therefore, the denominator of the multiplier (1-MPC) is smaller, making the multiplier larger.

If the Slope of the AE Curve Increases, the Multiplier