Assuming That the Crowding-Out Effect Is $100 Billion and the Multiplier

question 6

Multiple Choice

Assuming that the crowding-out effect is $100 billion and the multiplier effect of an increase in government purchases is $120 billion, then the total effect on aggregate demand will be:

• A)an $80 billion increase
• B)an $80 billion decrease
• C)a $20 billion increase
• D)a $20 billion decrease

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Definitions:

Nuisance

An act, condition, or thing that interferes with the use or enjoyment of property.

Trespass

An unauthorized entry on another’s property.

False Imprisonment

An intentional tort that prohibits the unlawful confinement of another for an appreciable time without his consent.

Confinement

The act of restricting someone or something within a space or area; imprisonment.