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:

Consistent

Showing steady conformity to character, profession, belief, or custom over time.

Values

Fundamental beliefs or standards of an individual or group that guide behavior and decision making.

Mutual Empathy

A shared understanding and reciprocal feeling of empathy among individuals, fostering a sense of connection and support.

Personal Control

An individual's ability to influence or manage their own behavior and environment.