When There Are Few Unemployed Resources, Additional Spending Will Tend

question 70

Multiple Choice

When there are few unemployed resources, additional spending will tend to

• A) flow directly to the unemployed resources, so that the multiplier can be maintained at 1/1-mpc.
• B) increase the marginal propensity to consume, and thereby increase the size of the multiplier.
• C) increase the demand for resources and drive prices downward, increasing the size of the multiplier.
• D) bid resources away from other activities and drive prices upward, reducing the size of the multiplier.

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Definitions:

Cournot Model

An economic model used to describe an industry structure in which companies compete on the quantity of output they will produce, assuming that their competitor's decisions are fixed.

Stackelberg Model

An economic model of strategic interaction in oligopolistic markets where one firm (the leader) sets its output first and then other firms (followers) set their outputs sequentially.

West's National Reporter System

A comprehensive set of law books that publishes the decisions of state and federal courts in the United States.

State Trial Court

The court of first instance in the state judicial system, where civil and criminal cases are initially tried.