The government builds a new recycling plant. The manager of the company hires workers and pays them an annual salary. These workers then increase their spending. The firms that sell the goods these workers buy also increase their output. This type of effect on spending illustrates the
multiplier effect

Multiplier effect

Explanation:

Multiplier effect refers to the increases in the final income as a result of new injections in spending. It indicates changes in spending that causes changes in real gross domestic product more than the initial change in spending. The scenario presented in the question illustrates multiplier effect. It involves increase in the level of demand in the circular flow of income that stimulates buying and selling.

government spending multiplier effect

Explanation:

In economics, the government spending multiplier effect refers to the increase in household income resulting from an increase in government spending. In macroeconomics, it is calculated by dividing 1 by marginal propensity to save (MPS).

In this case, the government spending was carried out locally, but the effects will benefit households and businesses from the local community and beyond. This effect happens because when the government spends money, the contractor will distribute part of it to its employees and vendors, and keeps the rest as profits that will later be distributed to the stockholders. Those vendors and employees purchase goods and services from other businesses, and the cycle goes on.

answer(d) encourage cooperation by improving the chances of mutually agreeable transactions;

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.