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

question 60

Multiple Choice

Assuming the crowding-out effect but no multiplier or investment-accelerator effects, what is the effect of a $600 billion increase in government expenditures on the aggregate demand or supply?

• A) It shifts the aggregate demand right by more than $600 billion.
• B) It shifts the aggregate demand right by less than $600 billion.
• C) It shifts the aggregate supply left by more than $600 billion.
• D) It shifts the aggregate supply left by less than $600 billion.

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Definitions:

Urban Development

The process of improving and expanding facilities, housing, and infrastructure in urban areas to enhance the quality of life for its inhabitants.

Traditional Gender Inequality

The systemic disparities and biases in opportunities, rights, and social roles based on gender, rooted in historical and cultural norms, leading to economic and social disadvantages particularly for women.

Fertility Rates

The typical amount of babies a woman gives birth to throughout her life in a particular demographic.

Kerala

a state in southwestern India known for its palm-lined beaches and backwaters, a network of canals, and its long history of spice trade.