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

question 28

Multiple Choice

Assuming the crowding-out effect but no multiplier or investment-accelerator effects, what is the effect of a $500 billion increase in government expenditures on the aggregate demand or supply?

• A)It shifts the aggregate demand right by more than $500 billion.
• B)It shifts the aggregate demand right by less than $500 billion.
• C)It shifts the aggregate supply left by more than $500 billion.
• D)It shifts the aggregate supply left by less than $500 billion.

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Definitions:

Findspot

The original location where an archaeological artifact was discovered, providing context for its use and significance.

Paleolithic Painting

Prehistoric artworks found on cave walls or ceilings, primarily in Europe, dating back to the Paleolithic era, showcasing animals, human figures, and abstract signs.

Entrance

An opening, such as a door, passage, or gate, that allows access to a place.

Well Shaft

A vertical passage used in mining or for accessing underground water.