Choose the correct statement about the multiplier in the long run.

Question

Accepted Answer

It has a smaller effect on real GDP than it has in the short run because the price level changes.

Answer

It has a larger effect on real GDP than it has in the short run, because the multiplier effect has a longer time period to exert its impact on the economy.

Answer

Its effect on real GDP might be smaller or larger than in the short run.

Answer

It has a larger effect on real GDP than it has in the short run because induced expenditure is greater in the long run.

Answer

It has a larger effect on real GDP than it has in the short run because the price level changes.

Crowdly

Choose the correct statement about the multiplier in the long run.

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