After an Increase in Autonomous Spending, in the Long Run

question 30

Multiple Choice

After an increase in autonomous spending, in the long run, changes in the price level

• A) will reduce the effect of the multiplier.
• B) will make the AE curve flatter.
• C) will make the AE curve steeper.
• D) will not affect the multiplier.

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Definitions:

Total Cost

The complete sum of all expenses incurred in the production and delivery of a product or service, including fixed and variable costs.

Research and Development Costs

Expenses associated with the research and development activities of a company, aiming at new product development and improvement of existing products.

Economies of Scale

Cost advantages that a business can achieve due to an increase in the scale of production, leading to lower per-unit costs.

Diseconomies of Scale

The phenomenon where, as a firm or production process increases in size beyond a certain point, the cost per unit increases, leading to reduced efficiency.