If the price level is constant, a change in investment has a multiplied impact on real GDP.

Name: If the price level is constant, a change in investment has a multiplied impact on real GDP.
Brand: Quizplus
Rating: 5.0 (34 reviews)

Question

Quizplus · Accepted Answer

This is because of the multiplier effect, where an initial increase in spending (such as an increase in investment) leads to a series of spending by others, thus having a multiplied impact on the overall economy and increasing real GDP more than the initial amount of spending.

If the Price Level Is Constant, a Change in Investment