Refer to the information provided in Figure 27.2 below to answer the question(s) that follow. Figure 27.2 -Refer to Figure 27.2. The output multiplier is smallest when the aggregate demand curve shifts from A) AD₁ to AD₂. B) AD₃ to AD₄. C) AD₅ to AD₆. D) The output multiplier is the same for all AD curve shifts shown in the figure.

Question

Quizplus · Accepted Answer

The output multiplier is smallest when the shift in the aggregate demand curve results in the smallest change in output. This typically occurs when the economy is near full capacity, where additional increases in demand lead to smaller increases in output due to constraints like limited resources or labor.

Refer to the Information Provided in Figure 27