When the Multiplier Is Included in the IS Curve, A

question 66

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) change in the real interest rate has a smaller impact on short-run fluctuations than with the standard IS curve.
• C) demand shock has a smaller impact on short-run fluctuations than with the standard IS curve.
• D) change in taxes has no impact on short-run output.
• E) change in the marginal product of capital has a smaller effect on short-run fluctuations in output than with the standard IS curve.

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Definitions:

Cigarette Ban

A cigarette ban is a public policy that prohibits the sale, consumption, and/or advertisement of cigarettes in order to protect public health.

Market Effects

The impact of economic events or policies on the broader market, including changes in prices, demand, and supply.

Subsidy Benefit

Financial assistance provided by the government to an individual or organization, aiming to reduce costs and encourage specific economic activities.

Demand Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with high elasticity indicating a significant response.