Figure 21-6

question 33

Multiple Choice

Figure 21-6. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.
-Refer to Figure 21-6. Suppose the multiplier is 3 and the government increases its purchases by $25 billion. Also, suppose the AD curve would shift from AD₁ to AD₂ if there were no crowding out; the AD curve actually shifts from AD₁ to AD₃ with crowding out. Finally, assume the horizontal distance between the curves AD₁ and AD₃ is $30 billion. The extent of crowding out, for any particular level of the price level, is

• A)$25 billion.
• B)$30 billion.
• C)$45 billion.
• D)$60 billion.

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Definitions:

Cost Centers

Departments or segments within an organization that do not directly generate revenue but incur costs, such as human resources or research and development.

Profits

The financial gain made in a transaction or business operation after accounting for all expenses.

Sales Training

A program or series of educational activities designed to enhance the skills and knowledge of sales personnel.

Profit Center

A division or segment of a business responsible for generating its own revenue and profit, evaluated independently of other parts of the business.