Assuming That the Crowding-Out Effect Is $100 Billion and the Multiplier

question 6

Multiple Choice

Assuming that the crowding-out effect is $100 billion and the multiplier effect of an increase in government purchases is $120 billion, then the total effect on aggregate demand will be:

• A)an $80 billion increase
• B)an $80 billion decrease
• C)a $20 billion increase
• D)a $20 billion decrease

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