When the Multiplier Is Included in the IS Curve

question 103

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 is correct.

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Definitions:

Monomer

Molecule that is a subunit of a polymer.

Glucose

A primary sugar crucial for energizing living beings and making up a significant part of numerous carbohydrates.

Cellulose

A sophisticated carbohydrate that is the main structural element of the walls of plant cells.

Enzyme Covalently Joins

Describes the process where an enzyme catalyzes the formation of a covalent bond between two molecules, playing a critical role in biochemical reactions.