Assuming the Multiplier Effect but No Crowding-Out or Investment-Accelerator Effects

question 28

Multiple Choice

Assuming the multiplier effect but no crowding-out or investment-accelerator effects, what is the effect of a $500 billion increase in government expenditures on the aggregate demand?

• A) It shifts the aggregate demand right by more than $500 billion.
• B) It shifts the aggregate demand right by less than $500 billion.
• C) It shifts the aggregate demand left by more than $500 billion
• D) It shifts the aggregate demand left by less than $500 billion.

---

Definitions:

Oppositional Defiant Disorder

A psychological disorder characterized by a persistent pattern of defiant, disobedient, and hostile behavior towards authority figures.

Impulse Control

The ability to resist or delay an impulse, drive, or temptation to act.

Rapid Eye Movement

A phase of sleep characterized by rapid movements of the eyes, low muscle tone, and the propensity to dream vividly.

Sigmund Freud

A neurologist from Austria who established psychoanalysis as a technique for addressing mental disorders through conversational therapy between a psychoanalyst and their patient.