Is the right answer b? thank you Assume the multiplier is 5 and that the crowding-out...

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Assume the multiplier is 5 and that the crowding-out effect is $30 billion. An increase in government purchases of $20 billio Is the right answer b? thank you

business economics

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Answer 1

Answer #1

According to the multiplier, the aggregate demand increases by $20 billion*5 =$100 billion.

However crowding out effect is of $30 billion.

Hence the actual increase is $100-$30 =$70 billion.

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Answer 2

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Add Answer to: Is the right answer b? thank you Assume the multiplier is 5 and that the crowding-out...

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Is the right answer b? thank you Assume the multiplier is 5 and that the crowding-out...