Assuming No Crowding-Out, Investment-Accelerator, or Multiplier Effects, How Will a $100

question 67

Multiple Choice

Assuming no crowding-out, investment-accelerator, or multiplier effects, how will a $100 billion increase in government expenditures shift aggregate demand?

• A) It will shift aggregate demand right by more than $100 billion.
• B) It will shift aggregate demand right by $100 billion.
• C) It will shift aggregate demand right by less than $100 billion.
• D) It will shift aggregate demand left by more than $100 billion.

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Definitions:

Externality

Actions of one party impose costs or benefits on a second party.

Economy of Scale

The cost advantages that enterprises obtain due to their scale of operation, typically resulting in decreased per-unit cost as production increases.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use doesn't reduce its availability to others.

Total Damage

The cumulative harm or loss resulting from an action or event, encompassing both material and immaterial impacts.