The Multiplier Effect Suggests That the Increase in Aggregate Demand

question 49

True/False

The multiplier effect suggests that the increase in aggregate demand could be smaller than the increase in government purchases, while the crowding-out effect suggests that the increase in aggregate demand could be larger than the increase in government purchases.

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Definitions:

Developmental Stake

A hypothesis that suggests parents and children view their relationship differently, with parents invested in continuity and children emphasizing change.

Companionate Interest

A profound and enduring form of friendship marked by mutual respect, affection, and concern for each other's well-being.

Boomerang Children

Young adults who return to live in their family home with their parents after a period of independence, often due to financial difficulties or personal choice.

Substance Addictions

A dependency on substances, such as drugs or alcohol, characterized by an uncontrollable urge to consume the substance despite harmful consequences.