-Refer to the Above Figure

question 198

Multiple Choice

-Refer to the above figure. If the economy is at E and the government wants to increase aggregate demand to , but the increase in spending only shifts the aggregate demand curve to , then

• A) complete crowding out has occurred.
• B) some crowding out has occurred.
• C) the increased borrowing caused interest rates to fall.
• D) the short-run aggregate supply curve is steeper than the figure indicates.

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Definitions:

Alfalfa

A perennial flowering plant often used in agriculture as fodder for livestock due to its high nutritional content and nitrogen-fixing properties.

Exchange Rate

The worth of one currency when converting it to a different one.

British Pound

The currency of the United Kingdom, symbolized as £ and known officially as the pound sterling.

Exchange Rates

The price at which one currency can be exchanged for another.