In the AS/AD model, the repercussion that a change in aggregate quantity demanded has on production and subsequently on income and expenditures is called the:
A)accelerator effect.
B)expenditure effect.
C)multiplier effect.
D)money wealth effect.

Question

Quizplus · Accepted Answer

The multiplier effect refers to the process in the AS/AD model where a change in aggregate demand leads to a more than proportionate change in production, which then affects income and expenditures, creating a cycle of increasing economic activity.

In the AS/AD Model, the Repercussion That a Change in Aggregate