... unexpected fashion, they change their production not their prices But eventually they also change prices To study 115 116 CHAPTER 11 the determination of the price level and real GDP the AS-AD model... and the MPS The smaller the MPC or, equivalently, the larger the MPS, the smaller the increase in expenditure at each step of the multiplier process and so the smaller the multiplier The basic... called the saving function 111 112   CHAPTER 11 The figure shows a consumption function Along the 45 degree line, consumption equals disposable income When the consumption function is above the