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:

Intrinsic Value

The perceived or calculated value of a company, currency, or asset based on its true fundamental value, excluding market fluctuations.

Market Value

Market value is the current price at which an asset or service can be bought or sold in a marketplace.

Deep in the Money

An options trading term referring to options with an exercise price far below (for calls) or above (for puts) the market price of the underlying asset.

Time to Expiration

The remaining period until the expiration date of a financial instrument such as an option or futures contract.