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.

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Definitions:

Instincts

Instincts refer to inherent inclinations towards a particular behavior or action, typically aimed at survival or reproduction, as proposed in various psychological and biological theories.

Extraverts

Individuals who are outgoing, sociable, and inclined towards seeking stimulation in the external environment.

Happier

A comparative state of experiencing greater joy or contentment.

Introverts

Introverts are individuals who tend to prefer solitary activities and feel drained by social interactions, compared to extroverts who are energized by socializing.