Suppose There Are Both Multiplier and Crowding Out Effects but Without

question 411

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 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:

Medical Supplies

Items used in healthcare settings for treatment, diagnosis, or preventive measures, including equipment and consumable goods.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, making it more useful for management control.

Equipment Depreciation

The allocation of the cost of tangible assets over their useful lives, reflecting the reduction in value due to wear and usage.

Spending Variance

The difference between the budgeted or planned amount of expenses and the actual amount spent.