As the aggregate expenditure curve becomes steeper, the value of the multiplier becomes
A)greater than 1.
B)negative.
C)larger.
D)smaller.
E)equal to the marginal propensity to save.

Question

Quizplus · Accepted Answer

The multiplier effect describes how an initial change in spending leads to a larger change in income and output. A steeper aggregate expenditure curve indicates a larger change in expenditure for a given change in income, which implies a larger multiplier effect.

As the Aggregate Expenditure Curve Becomes Steeper, the Value of the Multiplier