Assume the Government Cancels a Large Infrastructure Program,causing Construction Firms

question 250

Multiple Choice

Assume the government cancels a large infrastructure program,causing construction firms in the area to earn less and lay off workers.Consequently,businesses in the area suffer from a decrease in sales.This story illustrates:

• A) a reverse multiplier effect.
• B) an increase in aggregate demand.
• C) a negative technology shock.
• D) the crowding out effect.

---

Definitions:

Monopolistic Competition

A market structure characterized by many producers selling products that are similar but not identical, leading to competition based on price, quality, and innovation.

Market Share

The share of the market held by a specific company or product, typically represented as a percentage of the overall sales in that industry.

Oligopoly

A market structure characterized by a small number of firms that control a large majority of the market share, often leading to limited competition.

Pure Monopoly

A pure monopoly is a market structure where a single seller controls the entire supply of a product or service, and where the entry of new competitors is completely blocked.