If the Price Level Falls as Real GDP Decreases, the Multiplier

question 26

True/False

If the price level falls as real GDP decreases, the multiplier effects of any given change in aggregate expenditures are smaller than they would be if the price level remained constant.

---

Definitions:

Direct Labour Hour

A measure of the amount of time a worker spends on direct production activities.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels within a business.

Volume Variance

The difference between the expected volume of production or sales and the actual volume, affecting budget and performance analysis.

Fixed Overhead

Fixed overhead refers to the indirect costs of production that remain constant regardless of the level of output, such as rent, salaries, and insurance.