The multiplier effect suggests that the increase in aggregate demand could be smaller than the increase in government purchases, while the crowding-out effect suggests that the increase in aggregate demand could be larger than the increase in government purchases.

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The multiplier effect suggests that the increase in aggregate demand will be larger than the increase in government purchases, while the crowding-out effect suggests that the increase in aggregate demand will be smaller than the increase in government purchases.

The Multiplier Effect Suggests That the Increase in Aggregate Demand