Assume the Multiplier Is 5 and That the Crowding-Out Effect

question 38

Multiple Choice

Assume the multiplier is 5 and that the crowding-out effect is $30 billion.An increase in government purchases of $20 billion will shift the aggregate-demand curve to the

• A)right by $130 billion.
• B)right by $70 billion.
• C)right by $50 billion.
• D)right by $10 billion.