Imagine That the Government Increases Its Spending by $75 Billion

question 78

Multiple Choice

Imagine that the government increases its spending by $75 billion.Which of the following by itself would tend to make the change in aggregate demand different from $75 billion?

• A)both the multiplier effect and the crowding-out effect
• B)the multiplier effect,but not the crowding-out effect
• C)the crowding-out effect,but not the multiplier effect
• D)neither the crowding out effect nor the multiplier effect

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Definitions:

Flexible

The ability to easily adapt to new, different, or changing requirements and situations.

Agency Problem

arises in situations where there is a conflict of interest between the principals (owners) and agents (managers) of an organization, leading to potential difficulties in aligning their goals.

Conflict of Interest

A situation where a person's personal interest could potentially interfere with their professional duties or responsibilities, leading to compromised decision-making.

Motivation

Is the set of forces that causes people to behave in certain ways. Individual motivation is also a major determinant of individual performance, but motivation is at the heart of what causes an employee to choose to expend the effort that will support any organizational activity.