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Assuming the Multiplier Effect but No Crowding-Out or Investment-Accelerator Effects

Question 28

Multiple Choice

Assuming the multiplier effect but no crowding-out or investment-accelerator effects, what is the effect of a $500 billion increase in government expenditures on the aggregate demand?


A) It shifts the aggregate demand right by more than $500 billion.
B) It shifts the aggregate demand right by less than $500 billion.
C) It shifts the aggregate demand left by more than $500 billion
D) It shifts the aggregate demand left by less than $500 billion.

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