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

question 273

Multiple Choice

Assume the multiplier is 5 and that the crowding-out effect is $20 billion. An increase in government purchases of $10 billion will shift the aggregate-demand curve to the

• A)right by $150 billion.
• B)right by $70 billion.
• C)right by $30 billion.
• D)None of the above is correct.

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