The Simple Multiplier,which Applies to Short-Run Situations in Which the Price

question 118

Multiple Choice

The simple multiplier,which applies to short-run situations in which the price level is constant,describes changes in

• A)investment induced by changes in equilibrium income.
• B)saving caused by changes in desired investment.
• C)the equilibrium level of national income caused by changes in autonomous expenditure.
• D)the equilibrium rate of interest caused by changes in the demand for credit.
• E)employment induced by changes in equilibrium income.

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Definitions:

Neoclassical Economic Models

These models focus on how the market equilibrium is achieved through the supply and demand for goods and services, emphasizing consumers maximizing utility and firms maximizing profit.

Heuristics

Simple, efficient rules or methods that people often use to form judgments and make decisions, based on limited information.

Utility-Maximizing

A principle or approach in economics that suggests individuals allocate their resources in a way that maximizes their satisfaction or utility.

Heuristics

Mental shortcuts or rules of thumb that simplify decision-making processes, often at the cost of perfect accuracy or thoroughness.