When the Multiplier Is Included in the IS Curve

question 60

Multiple Choice

When the multiplier is included in the IS curve:

• A) a demand shock has a larger impact on short-run fluctuations than with the standard IS curve
• B) it has no impact on potential output
• C) a demand shock has a smaller impact on short-run fluctuations than with the standard IS curve
• D) a change in taxes has no impact on short-run output
• E) None of these answers are correct.

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Definitions:

Self-serving Bias

A cognitive bias that involves attributing successes to internal factors and failures to external factors to protect self-esteem.

Fundamental Attribution Error

The tendency to overestimate the influence of personality and underestimate the influence of situational factors when explaining others' behavior.

Self-disclosure

The act of revealing personal information, thoughts, or feelings to others, which can enhance relationship intimacy and trust.

Big Five Model

A theory in psychology that identifies five fundamental personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.