d)Demonstrate how the drop in consumer confidence would affect the economy through the multiplier. Use three rounds of effects to demonstrate the multiplier effects. Let the first round be related to car purchases, the second round related to clothing, and the third round related to food.

C drops by 1, so we buy one less car. Car workers have $1 less in income, so

they spend $

0

less on clothing (they still have to wear something, the $

0

worth of clothing). Clothing workers have $

0

less income, so they spend

$

0

less on food (they still have to eat, the $

0

worth of food), and so on...