Answer:
The economic concept of scarcity.
Explanation:
In economics, <em>scarcity</em><em> </em>represents the phenomenon of <em>limitless</em> <em>wants</em> suppressed by <em>limited</em><em> </em><em>resources</em>.
In this case, Allie feels she needs $90 shoes while she has not got the resources required to buy them.
This typical economic problem can be solved by moderating one's wants and clearly identifying what is priority from what is not, then intelligently making decisions on what available resources should be spent.
The formula to determine the multiplier(M) is:
M = 1 / (1 – MPC)
where:
MPC=Marginal propensity to consume
What Is a Multiplier?
A multiplier is a broad term in economics that refers to an economic factor that, when increased or changed, causes increases or changes in many other related economic variables. In terms of GDP, the multiplier effect causes total output gains to be greater than the change in spending that caused it.
Typically, the term multiplier refers to the relationship between government spending and total national income. The deposit multiplier is another multiplier used to explain fractional reserve banking.
Often the multiplier formula is considered to be too simple because it ignores some real-world complications. The Reason is:
Option A. The formula ignores the impact of an increase in GDP on consumption.
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