Figure 21-6

question 224

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 graphs are drawn to show the effects of an increase in government purchases. If it were not for the increase in r from r₁ to r₂, then

• A)there would be no crowding out.
• B)the full multiplier effect of the increase in government purchases would be realized.
• C)the AD curves that actually apply, before and after the change in government purchases, would be separated horizontally by the distance equal to the multiplier times the change in government purchases.
• D)All of the above are correct.

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Definitions:

Fraudulent Misrepresentation

A false statement of fact made by a person who knows, or should know, that it is false, and made with the intention of deceiving another.

Authority

The legal power or right given to an individual or body to make decisions, enforce rules, or govern.

Identity

The distinguishing character or personality of an individual; aspects that make up who someone is.

Warranty of Authority

A guarantee made by an agent that they have the authority from their principal to perform a certain act.