Assuming crowding-out but no multiplier or investment-accelerator effects,a $100 billion increase in government expenditures shifts aggregate
A)demand right by more than $100 billion.
B)demand right by less than $100 billion.
C)supply left by more than $100 billion.
D)supply left by less than $100 billion.

Question

Quizplus · Accepted Answer

Crowding-out suggests that an increase in government spending will lead to a decrease in private spending. Therefore, the increase in government expenditures will partially offset the increase in aggregate demand. As a result, the shift in aggregate demand will be less than $100 billion.

Assuming Crowding-Out but No Multiplier or Investment-Accelerator Effects,a $100 Billion