When the economy's AS curve is positively sloped,the multiplier in the AD/AS model is
A)constant.
B)equal to one.
C)equal to the simple multiplier.
D)smaller than the simple multiplier.
E)larger than the simple multiplier.

Question

Quizplus · Accepted Answer

When the AS curve is positively sloped, it means that an increase in AD will lead to higher prices rather than increased output. This means that the multiplier in the AD/AS model will be smaller than the simple multiplier since each subsequent round of spending will lead to higher prices rather than increased output.

When the Economy's AS Curve Is Positively Sloped,the Multiplier in the AD/AS