This chapter described the multiplier as (1 / (1 2 MPC)). However, many important variables, including the
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This chapter described the multiplier as (1 / (1 2 MPC)). However, many important variables, including the price level and interest rates, are held constant in arriving at this equation. In one paragraph, explain whether the multiplier would be larger or smaller if an increase in government expenditures always leads to an increase in the price level.
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