Refer to the Information Provided in Figure 9

question 65

Multiple Choice

Refer to the information provided in Figure 9.5 below to answer the questions that follow. Figure 9.5
-Refer to Figure 9.5. The government spending multiplier equals ________ and the tax multiplier equals ________.

• A) 2.5; -1.5
• B) 4; -3
• C) 5; -4
• D) 9; -8

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Definitions:

Purely Competitive Firm

A business that operates in a market where there are many buyers and sellers, the products are homogenous, and there are no barriers to entering or exiting the market.

Maximize

To increase to the greatest possible amount or degree, often used in the context of optimizing outcomes such as profit, efficiency, or utility in various fields.

Total Fixed Cost

The total of all costs that do not change with the level of production or sales activities within a company.

Purely Competitive Market

A market structure characterized by many buyers and sellers, no barriers to entry, and a homogeneous product, leading to the firms being price takers.