Figure 34-5

question 76

Multiple Choice

Figure 34-5.On the left-hand graph,MS represents the supply of money and MD represents the demand for money;on the right-hand graph,AD represents aggregate demand.The usual quantities are measured along the axes of both graphs.

-Refer to Figure 34-5.Suppose the multiplier is 3 and the government increases its purchases by $25 billion.Also,suppose the AD curve would shift from AD₁ to AD₂ if there were no crowding out;the AD curve actually shifts from AD₁ to AD₃ with crowding out.Finally,assume the horizontal distance between the curves AD₁ and AD₃ is $30 billion.The extent of crowding out,for any particular level of the price level,is

• A) $25 billion.
• B) $30 billion.
• C) $45 billion.
• D) $60 billion.

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Definitions:

Process

A series of actions or steps taken in order to achieve a particular end.

Ecological Model

A framework or perspective that emphasizes the multiple levels (individual, interpersonal, community, and policy) influencing behaviors and conditions.

Behavioral Patterns

Repeated behaviors or actions exhibited by individuals, often analyzed to identify trends or predict future behavior.

Diffusion of Innovation

A theory describing the process by which new ideas, products, or practices spread within a community or society.