If the multiplier is 6 and if there is no crowding-out effect,then a $60 billion increase in government expenditures causes aggregate demand to
A)increase by $250 billion.
B)increase by $333 billion.
C)increase by $360 billion.
D)None of the above are correct.

Question

Quizplus · Accepted Answer

If the multiplier is 6 and there is no crowding-out effect, then a $60 billion increase in government expenditures will lead to a $360 billion increase in aggregate demand. This is because the multiplier effect amplifies the initial increase in government spending by a factor of 6, resulting in a total increase in spending equal to 6 times the initial increase. Therefore, the correct option is C.

If the Multiplier Is 6 and If There Is No