Final answer:
The statement that a greater upward slope of the AS curve leads to a larger realized multiplier effect is false. A steeper AS curve suggests that the economy is near full capacity, making real GDP less responsive to price level changes and diminishing the multiplier effect.
Step-by-step explanation:
The statement that 'The greater the upward slope of the AS curve, the larger is the realized multiplier effect of a change in investment spending' is false. The multiplier effect refers to the idea that an increase in expenditure leads to an even larger increase in the equilibrium output. However, when considering the Aggregate Supply (AS) curve, the steeper the slope of the AS curve in its intermediate range, the less responsive the real GDP is to changes in the price level. This implies that as the economy approaches full capacity, the efficiency of the multiplier effect is actually reduced because increases in demand lead to smaller increases in output and more increases in the price level instead.
Therefore, if the AS curve is upward sloping and steep, it indicates that the economy is nearing its full capacity, and a change in investment spending will result in smaller increases in real GDP and larger price increases, reducing the potency of the multiplier effect.