Economics sample problem for Conservatives: If the "wealth multiplier effect" - the degree of increased?

The full multiplier effect means 1/(1-MPC) x an increase in investment. For example,if MPC=0.8.An increase in investment of $100 will create full multiplier effect = 5x100=$500. In fact,it will take many round of consumption until the full effects can be reached.

It is in the short run only, that means AS will be horizontal, because all inputs and capacity are fixed. The multiplier effect is a bout the change in aggregate demand (AD).

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