If the economy reaches the positively sloped portion of the aggregate supply curve,the value of the multiplier increases,as some of the increase in output is absorbed into prices increases.

Question

Quizplus · Accepted Answer

The value of the multiplier decreases in the positively sloped portion of the aggregate supply curve because some of the increase in aggregate demand leads to higher prices rather than an increase in output.

If the Economy Reaches the Positively Sloped Portion of the Aggregate