Economist John Maynard Keynes developed the aggregate spending model and the notion of the spending multiplier in the 1930s to explain the most traumatic event in economic history at that time: the Great Depression.

Following an increase in autonomous spending, what is the impact of the spending multiplier in the short run, when the price level remains constant (increases or decreases or remains constant) on:

Explain why (including possible movements in OA ( and/or AD) the final impact of the spending multiplier effect on real GDP may be diminished if prices do not remain constant as in question (d) and the economy moves into an inflationary gap: