If the Economy Is Already at Its Potential Output,then the Spending

question 137

Multiple Choice

If the economy is already at its potential output,then the spending multiplier is:

• A)zero in the long run.
• B)infinite in the long run.
• C)equal to 1 in the long run.
• D)zero in the short run.
• E)equal to 1 in the short run.

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Definitions:

Advertising Costs

The expenses incurred in promoting products or services to potential consumers through various media channels.

Advertising Costs

Expenses related to the promotion of products, services, or brands to potential customers.

Profit Function

A mathematical representation of how a firm’s profits are affected by various levels of output and prices.

Spaghetti Consumption

The act of consuming spaghetti, a long, thin, cylindrical pasta of Italian origin.