The Balanced-Budget Multiplier

question 38

Multiple Choice

The balanced-budget multiplier

• A) equals 0.
• B) is greater than 0 but less than 1.
• C) is greater than 1.
• D) equals 1.

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Definitions:

Deadweight Loss

A cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.

Labor Market

The supply and demand for labor, where employers seek to hire workers and workers look for jobs.

Pure Monopsonist

A market condition in which there is only one buyer for a product or service.

Marginal Revenue Product

Marginal Revenue Product measures the additional revenue generated by employing one more unit of a factor, such as labor or capital, crucial in determining how resources are allocated.