The multiplier effect would lead to higher price levels and no increases in employment and RGDP if:

Question

Quizplus · Accepted Answer

The multiplier effect works by increasing demand, which in turn leads to increased production and employment. However, if all resources are already fully employed, there is no scope for increasing employment and production. Instead, the increase in demand will lead to higher price levels due to supply constraints, and there will be no further increase in RGDP.

The Multiplier Effect Would Lead to Higher Price Levels and No