The larger the multiplier, the _______ the AE curve and the _______the AD curve from a given increase in investment.
A)flatter; greater the movement upward along
B)flatter; greater the rightward shift of
C)steeper; greater the rightward shift of
D)steeper; greater the movement downward along
E)steeper; greater the movement upward along

Question

Quizplus · Accepted Answer

A larger multiplier indicates that a given change in investment will lead to a greater overall shift in aggregate demand, hence the steeper AD curve. Additionally, since the multiplier relates changes in income to changes in spending, a greater multiplier implies a stronger relationship between the two, and thus a more pronounced shift in the AE curve.

The Larger the Multiplier, the _______ the AE Curve and the _______The

The Larger the Multiplier, the _ the AE Curve and the _The