Assuming the Multiplier Effect but No Crowding-Out or Investment-Accelerator Effects,what

question 137

Multiple Choice

Assuming the multiplier effect but no crowding-out or investment-accelerator effects,what is the effect of a $300 billion increase in government expenditures on the aggregate demand?

• A)It shifts the aggregate demand right by more than $300 billion.
• B)It shifts the aggregate demand right by less than $300 billion.
• C)It shifts the aggregate demand left by more than $300 billion
• D)It shifts the aggregate demand left by less than $300 billion.

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Definitions:

Double-Digit Inflation

An inflation rate that reaches or exceeds 10%, indicating rapid increases in prices.

Double-Digit Unemployment

A situation where the unemployment rate reaches or exceeds 10 percent, indicating a high level of joblessness.

Stagflation

A condition of slow economic growth and relatively high unemployment—a period of stagflation—accompanied by rising prices (inflation).

Misery Index

An economic indicator created by summing the unemployment rate and inflation rate, aiming to provide a snapshot of the average citizen's economic well-being.