The difference in the influence of a multiplier between the short run and the long run is that
A)the multiplier effect is larger in the long run.
B)the multiplier effect is zero in the short run.
C)the multiplier effect depends on potential GDP in the long run.
D)the multiplier effect is zero in the long run.
E)there is no multiplier effect in the short run.

Question

Quizplus · Accepted Answer

In the long run, the economy tends to return to its potential output, rendering the multiplier effect essentially zero as any increase in aggregate demand leads to price level changes rather than changes in real output.

The Difference in the Influence of a Multiplier Between the Short