If the economy's AS curve is vertical,the multiplier in the AD/AS model is
A)infinitely large.
B)equal to the simple multiplier.
C)smaller than the simple multiplier.
D)zero.
E)negative.

Question

Quizplus · Accepted Answer

When the AS curve is vertical, it means that the economy's potential output level is fixed and any increase in aggregate demand will not result in an increase in output but will only lead to an increase in the price level. In this case, the multiplier in the AD/AS model is zero because a change in aggregate demand will not result in a change in output, regardless of the size of the initial change in demand.

If the Economy's AS Curve Is Vertical,the Multiplier in the AD/AS