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

question 218

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 or supply?

• 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 right by exactly $300 billion
• D)It shifts the aggregate supply left by more than $300 billion.

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Definitions:

Panic Attacks

Sudden, intense surges of fear or discomfort accompanied by physical and psychological symptoms, often occurring abruptly.

Schizophrenia

A major mental disorder defined by significant disturbances in reasoning, emotions, self-perception, communication skills, sense of reality, and actions.

Dissociative Disorder

A psychiatric disorder characterized by a disruption and inconsistency in one's thoughts, memories, environment, behaviors, and self-perception.

Bipolar Disorder

A disorder of mental health distinguished by pronounced changes in mood, alternating between periods of extreme happiness (mania or hypomania) and deep sadness (depression).