Consider the Simplest Macro Model with Demand-Determined Output

question 52

Multiple Choice

Consider the simplest macro model with demand-determined output.Other things being equal,the ________ the value of the simple multiplier,the ________ stable is real GDP in response to shocks to autonomous spending.

• A)larger; more
• B)larger; less
• C)smaller; more
• D)smaller; less
• E)both B and C are correct

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Definitions:

Unequivocally Pareto Optimal

A situation where an allocation cannot be adjusted to make one individual better off without making someone else worse off, signifying an optimal allocation of resources.

Pareto Optimality

A situation where resources are distributed in such a way that it's not possible to improve the position of any individual or satisfy a preference more fully without adversely affecting at least one other individual or preference criterion.

Market Imperfections

Situations in which the assumptions of a perfectly competitive market are not met, leading to inefficiencies in market outcomes.

Labor Force

The total number of people employed or actively seeking employment in a given economy.