When the Crowding-Out Effect of a Decrease in Government Purchases

question 86

Multiple Choice

When the crowding-out effect of a decrease in government purchases is included in the analysis,what is the effect on AD?

• A)AD shifts right, but by less than the simple multiplier analysis would imply.
• B)AD doesn't change.
• C)AD shifts left.
• D)AD shifts right, but by more than the simple multiplier analysis would imply.

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Definitions:

Negative Reinforcement

A behavioral principle where the removal of an undesirable or unpleasant stimulus following a behavior increases the likelihood of that behavior being repeated in the future.

Nagging

A persistent annoyance or complaining about something in a repetitive and irritating manner.

Functional Analysis

A behavioral technique that identifies the antecedents and consequences of behavior to understand its purpose or function.

Motivation Behind Behavior

The underlying reasons or forces that drive an individual to act or behave in a certain way, which can be intrinsic or extrinsic in nature.