Which of the Following Helps Explain How the Multiplier and Crowding-Out

Multiple Choice

Which of the following helps explain how the multiplier and crowding-out effect impact the size of the shift in aggregate demand from a tax change.

A) ​Tax cuts stimulate consumer spending, earnings and profits rise, which further stimulates consumer spending-the multiplier effect.
B) ​The higher income leads to an increase in the demand for money, which tends to lead to higher interest rates.
C) ​The higher interest rates make borrowing more costly and reduce investment spending-the crowding-out effect.
D) ​All of the above