Analyzing the economy is not as precise as the multiplier model makes it appear,for the following reasons: 1)Fluctuations can sometimes be greater than the model suggests,2)The multiplier model is not a complete model of the economy,3)Shifts are not as great as intuition suggests.4)The price level will often change in response to shifts in demand.5)People's forward-looking expectations make the adjustment process much more complicated.6)Shifts in expenditures might reflect desired shifts in supply and demand,and,7)Expenditures depend on much more than current income.Discuss three of these reasons.

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The Answer of Analyzing the economy is not as precise as the multiplier model makes it appear,for the following reasons: 1)Fluctuations can sometimes be greater than the model suggests,2)The multiplier model is not a complete model of the economy,3)Shifts are not as great as intuition suggests.4)The price level will often change in response to shifts in demand.5)People's forward-looking expectations make the adjustment process much more complicated.6)Shifts in expenditures might reflect desired shifts in supply and demand,and,7)Expenditures depend on much more than current income.Discuss three of these reasons.

Analyzing the Economy Is Not as Precise as the Multiplier