After an increase in autonomous spending, in the long run a change in the price level
A) will make the AE curve steeper.
B) will make the AE curve flatter.
C) will reduce the effect of the multiplier.
D) will not affect the multiplier.

Question

Quizplus · Accepted Answer

In the long run, a change in the price level can reduce the real value of money, which affects consumption and investment, thereby reducing the effect of the multiplier.

After an Increase in Autonomous Spending, in the Long Run