Suppose There Are Both Multiplier and Crowding Out Effects but Without

question 276

Multiple Choice

Suppose there are both multiplier and crowding out effects but without any accelerator effects. An increase in government expenditures would definitely

• A)shift aggregate demand right by a larger amount than the increase in government expenditures.
• B)shift aggregate demand right by the same amount as an the increase in government expenditures.
• C)shift aggregate demand right by a smaller amount than the increase in government expenditures.
• D)Any of the above outcomes are possible.

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Definitions:

Reversing Entry

An accounting entry that is made at the beginning of an accounting period to reverse or cancel out a previously made adjusting entry.

Salaries Expense

The total amount of salary payments owed to employees for work performed during a specific period.

Salaries Payable

An account that records amounts owed to employees for work performed but not yet paid, a liability on the balance sheet.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made at the end of the previous accounting period.