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

Question 60

Multiple Choice

Assuming the crowding-out effect but no multiplier or investment-accelerator effects, what is the effect of a $600 billion increase in government expenditures on the aggregate demand or supply?


A) It shifts the aggregate demand right by more than $600 billion.
B) It shifts the aggregate demand right by less than $600 billion.
C) It shifts the aggregate supply left by more than $600 billion.
D) It shifts the aggregate supply left by less than $600 billion.

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