If the Economy Is Already Producing at Its Potential,_____

question 64

Multiple Choice

If the economy is already producing at its potential,_____.

• A)the spending multiplier equals 1/(1 - MPC)in the long run
• B)the spending multiplier is less than 1/(1 - MPC)in the long run
• C)the spending multiplier is more than 1/(1 - MPC)in the long run
• D)the spending multiplier equals zero in the long run
• E)the aggregate demand curve is horizontal

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Definitions:

Product Diversity

The range and variety of products and services offered by firms within a market or industry.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and products that are similar across suppliers, ensuring no single entity can control prices.

Entry Barriers

Obstacles that make it difficult for new competitors to enter an industry or market.

Regulatory Standards

Specifications and guidelines established by authorities designed to ensure products, services, and actions meet required safety, quality, and performance criteria.