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25 August, 00:49

Suppose that government purchases rise by $100 billion and together consumption and investment decline by a total of $80 billion.

This is an example of:

a) complete crowding out.

b) zero crowding out.

c) incomplete crowding out.

d) an activity that shifts the AD curve to the left.

e) b and d

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Answers (1)
  1. 25 August, 03:30
    0
    a) complete crowding out.

    Explanation:

    This is an example of crowding out effect, when government increases it's involvement in a market, such that it reduces private sector investment, it is called crowding out
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