Assume that because the government cancels a large infrastructure program construction firms earn less and lay off workers. Consequently, the region where they live suffers from decreased sales. This story illustrates

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This story illustrates a reverse multiplier effect, where a decrease in spending leads to a decrease in income and employment, causing a ripple effect throughout the economy. An increase in aggregate demand would have the opposite effect, causing economic growth and job creation. A negative technology shock refers to a situation where technological advancements lead to decreased productivity or increased costs, which is not the case in this scenario.

Assume That Because the Government Cancels a Large Infrastructure Program