Suppose that in 2006 the slope of the AE curve is 0.67 and in 2007 the slope of the AE curve changes to 0.8. Which of the following best describes what happens to the multiplier?
A) It falls from 5 to 3.
B) It falls from 1.49 to 1.25.
C) It rises from 3 to 5.
D) It rises from 1.25 to 1.49.
Correct Answer:
Verified
Q257: In the above figure the economy is
Q258: When autonomous expenditure decreases, .
A) the AE
Q259: The multiplier is larger if the
A) marginal
Q260: The multiplier effect occurs because
A) of income
Q261: If there are no taxes or imports
Q263: If there are no taxes or imports
Q264: If investment increases by $300 and, in
Q265: Which of the following makes the multiplier
Q266: If the multiplier for a change in
Q267: The expenditure multiplier equals
A) MPC - MPS
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