As long as the multiplier process is working, firms will meet additional demand without raising prices.

Question

Quizplus · Accepted Answer

The multiplier process in economics refers to the increase in final income arising from any new injection of spending. However, firms might still raise prices in response to additional demand, especially if they are operating near or at full capacity, due to increased costs or to manage demand.

As Long as the Multiplier Process Is Working, Firms Will