In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, if the slope of the aggregate expenditures curve decreases, the multiplier
A) increases.
B) decreases.
C) remains constant.
D) is undefined.

Question

Quizplus · Accepted Answer

The multiplier is inversely related to the slope of the aggregate expenditures curve. If the slope decreases, it means the marginal propensity to consume is lower, leading to a smaller multiplier.

In the Simple Aggregate Expenditure Model Where All Components of Aggregate