Figure 21-6

question 224

Multiple Choice

Figure 21-6. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.
-Refer to Figure 21-6. Suppose the graphs are drawn to show the effects of an increase in government purchases. If it were not for the increase in r from r₁ to r₂, then

• A)there would be no crowding out.
• B)the full multiplier effect of the increase in government purchases would be realized.
• C)the AD curves that actually apply, before and after the change in government purchases, would be separated horizontally by the distance equal to the multiplier times the change in government purchases.
• D)All of the above are correct.

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Definitions:

Participatory Planning

Includes the people who will be affected by plans and/or whose help is needed to implement them.

Increase Commitment

The process of enhancing dedication and loyalty towards a task, organization, or relationship, aiming for improved engagement and outcomes.

Scarce Resources

Natural or human-made assets that are limited in availability, often leading to competition for their use or allocation.

Participatory Planning

A planning approach that involves stakeholders, especially those affected by decisions, in the decision-making process to ensure inclusivity and relevance.