The larger the multiplier, the ________ the AE curve and the ________ the AD curve from an increase in investment.
A) steeper; smaller the shift in
B) steeper; larger the shift in
C) flatter; larger the movement along
D) flatter; smaller the movement along

Question

Quizplus · Accepted Answer

A larger multiplier makes the AE (Aggregate Expenditure) curve steeper because each increase in investment results in a larger increase in aggregate expenditure. It also causes a larger shift in the AD (Aggregate Demand) curve because the total increase in demand is magnified by the multiplier effect.

The Larger the Multiplier, the ________ the AE Curve and the ________

The Larger the Multiplier, the the AE Curve and the