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

question 60

Multiple Choice

Assuming the crowding-out effect but no multiplier or investment-accelerator effects, what is the effect of a $600 billion increase in government expenditures on the aggregate demand or supply?

• A) It shifts the aggregate demand right by more than $600 billion.
• B) It shifts the aggregate demand right by less than $600 billion.
• C) It shifts the aggregate supply left by more than $600 billion.
• D) It shifts the aggregate supply left by less than $600 billion.

Understand how managerial incentives might drive production decisions under absorption costing.

Analyze the effect of costing methods on financial performance measurement.

Understand the behavior of fixed and variable costs in relation to production and sales decisions.

Understand the concept and application of financial structure leverage ratios.

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