Firms Have No Inventories That They Can Draw Down to Meet

question 186

Multiple Choice

Firms have no inventories that they can draw down to meet an increase in demand. This will

• A) have no effect on the multiplier, because the MPC remains unchanged.
• B) decrease the size of the multiplier, because firms will be able to respond more quickly to a change in demand.
• C) increase the size of the multiplier, because output will need to immediately respond to changes in demand.
• D) either increase or decrease the multiplier, depending on the size of the MPC.

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Definitions:

Self-Disclosure

The act of revealing personal or private information about oneself to others.

Reciprocal

Involving mutual actions or exchange between two parties or entities.

Cultural Environment

The totality of social norms, values, beliefs, and practices shared by a particular group, influencing behavior and perception.

To Have Sex

Engaging in sexual activities or intercourse, involving physical intimacy between individuals.