Theoretically, What Should Happen to the Value of the Multiplier

question 53

Essay

Theoretically, what should happen to the value of the multiplier along a consumption function that is increasing at a decreasing rate?

---

Definitions:

Adjustment Period

The time frame in which adjustments are made to adapt to new conditions, such as changes in interest rates for adjustable-rate mortgages or the transition period in economic policies.

Demand Increase

A situation where the quantity of a good or service that consumers are willing and able to purchase at a given price rises.

Perfectly Inelastic

A scenario where the quantity demanded or supplied of a good does not change regardless of changes in its price.

Price Range

The spread between the highest and lowest selling price of a good or service in a particular market over a certain period of time.