Assume the Multiplier Is 5 and That the Crowding-Out Effect

question 38

Multiple Choice

Assume the multiplier is 5 and that the crowding-out effect is $30 billion.An increase in government purchases of $20 billion will shift the aggregate-demand curve to the

• A)right by $130 billion.
• B)right by $70 billion.
• C)right by $50 billion.
• D)right by $10 billion.

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Definitions:

Delta Waves

Brainwaves that are associated with deep sleep and are characterized by their high amplitude and low frequency.

Slow-Wave Sleep

Deep sleep; associated with Stage 3 and Stage 4 sleep.

Alpha Waves

Brain waves detected by an EEG that indicate a state of relaxation or light meditation, typically with a frequency of 8-12 Hz.

Stage 4 Sleep

The deepest stage of NREM sleep, characterized by an EEG pattern of more than 50% delta waves.