Refer to the Above Diagram

question 31

Multiple Choice

Refer to the above diagram.The sizes of the multipliers associated with changes in investment and government spending in this economy:

• A)are 2.5 and 1.5 respectively.
• B)are 3 and 2 respectively.
• C)are both 2.5.
• D)are 2 and 3 respectively.

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Definitions:

Market Equilibrium

A situation in a market where the quantity of a product demanded by consumers equals the quantity supplied by producers, leading to a stable price.

Competitive Industry

An industry characterized by a large number of firms competing with each other to provide goods or services to consumers.

Market Demand

The total quantity of a product or service that consumers are willing and able to purchase at various prices during a specified time period.

Market Equilibrium

A state in a market where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price.