Compare the multiplier in the short run and the long run and explain why they are not identical.

Choose the statement that is incorrect.

Starting from afull-employment equilibrium, the multiplier in the short run_______ the multiplier in the long run because _______.

A.

is the sameas; the price level is not fixed in both the short run and the long run

B.

is the sameas; the money wage is the same in both the short run and the long run

C.

exceeds; the money wage rate is fixed in the short run but not in the long run

D.

exceeds; the price level is fixed in the short run but not in the long run