The Multiplier Effect Is Smallest

question 50

Multiple Choice

The multiplier effect is smallest

• A) when the economy is in a recession.
• B) in the long run.
• C) in the short run.
• D) when the price level is fixed.

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Definitions:

Persistent Unemployment

A situation where unemployment remains high or continues over a long period, often due to structural factors in the economy.

Wage Discrimination

The practice of paying different wages to employees who perform similar jobs, based on non-job-related factors like gender, race, or age.

Efficiency Wage

A wage set above the market equilibrium to increase productivity by encouraging higher effort or reducing turnover among employees.

Positive Amount of Unemployment

A situation where there is a nonzero level of unemployment in the economy, often considered normal due to frictions and transitions in the job market.