If the price level ____ as real GDP increases, the multiplier effects of any given change in aggregate demand are ____ than they would be if the price level remains constant.

Question

Quizplus · Accepted Answer

When the price level rises as real GDP increases, it can dampen the multiplier effects of a change in aggregate demand because the increase in prices can reduce the purchasing power of consumers, leading to smaller increases in consumption and investment than if the price level remained constant.

If the Price Level ____ as Real GDP Increases, the Multiplier