Assume the Multiplier Is 5 and That the Crowding-Out Effect

question 273

Multiple Choice

Assume the multiplier is 5 and that the crowding-out effect is $20 billion. An increase in government purchases of $10 billion will shift the aggregate-demand curve to the

• A)right by $150 billion.
• B)right by $70 billion.
• C)right by $30 billion.
• D)None of the above is correct.

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Definitions:

Economic Costs

The total cost of choosing one action over others, representing both the direct and opportunity costs.

Valuing Diversity

The recognition and appreciation of the differences in culture, background, and perspective among individuals within a group.

Racial Group

A categorization of humans based on shared physical or social qualities into groups considered to be distinct by society.

Cultural Group

A collection of individuals who share common cultural, religious, or ethnic backgrounds.