Figure 34-6

question 115

Multiple Choice

Figure 34-6.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 34-6.Suppose the multiplier is 5 and the government increases its purchases by $15 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.Also,suppose the horizontal distance between the curves AD₁ and AD₃ is $55 billion.The extent of crowding out,for any particular level of the price level,is

• A)$75 billion.
• B)$40 billion.
• C)$30 billion.
• D)$20 billion.

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Definitions:

Major Function

The primary role or purpose that something serves or is designed to perform.

Stomata

Tiny openings or pores in plant tissue that allow for gas exchange, including the intake of carbon dioxide and release of oxygen.

Membrane Permeability

The ability of a membrane to allow substances to pass through it, which can be regulated to maintain cellular homeostasis.

Acid Precipitation

Precipitation that is acidic as a result of both sulfur and nitrogen oxides forming acids when they react with water in the atmosphere.