The Multiplier and the Price Level

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Let’s consider a situation when price level is fixed and we take into account the adjustments that happen in spending that occurs in a short run. If we consider the time frame, we will notice that shock absorbers (such as Michael Bloomberg’s car) cannot help in smoothing cobblestones of economy which is generally measures as investment and exports changes. In fact, this situation is augmented like that of voice of Alicia key. Please note that these outcomes are realized only when price is at a fixed level. So let’s thoroughly investigate on a similar situation when after a further long time lapse when this price level realizes some changes.

 

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