Refer to the Graph Shown

question 19

Multiple Choice

Refer to the graph shown. Suppose the government borrows $50 million to finance an increase in its spending and that as a result, the level of investment is reduced by $50 million. In this case, the aggregate demand curve will:

• A)shift from AD₀ to AD₂ but then back to AD₁.
• B)shift from AD₀ to AD₂ but then out to AD₃.
• C)shift from AD₀ to AD₂.
• D)not shift.

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Definitions:

Criminal Act

An action or omission that constitutes an offense that may be prosecuted by the state and is punishable by law.

Biological Father

The male parent who has contributed the genetic material to a child.

Born out of Wedlock

Refers to a child born to parents who are not legally married to each other at the time of the child's birth.

Snob Effect

The phenomenon where the demand for a certain good increases as it becomes more exclusive or prestigious, independent of its price.