If the Crowding-Out Effect Is at Its Maximum Strength, It

question 173

Multiple Choice

If the crowding-out effect is at its maximum strength, it follows that an increase in government spending will

• A)cause aggregate demand and GDP to increase.
• B)cause aggregate demand and GDP to decrease.
• C)not affect aggregate demand and GDP.
• D)not cause the budget deficit to increase.

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Definitions:

Modus Tollens (MT)

A form of logical argument where the contrapositive is taken: if P implies Q and Q is false, then P must also be false.

Constructive Dilemma (CD)

A logical argument asserting that if P implies Q and R implies S, and either P or R is true, then either Q or S must be true.

Atomic Sentences

The simplest type of sentence that cannot be broken down into smaller components while still expressing a complete proposition.

Truth Table

A mathematical table used in logic to determine whether a compound statement is true or false, depending on the truth values of its components.